Niagara’s Gold Triggered Amazing Treasure Hunt

By James Donahue

When the German raider Orion dropped hundreds of mines across the northern approaches to New Zealand and around the Australian Coast in 1940, the stage was set for one of the most remarkable sunken treasure hunts in the history of deep water diving.

On the morning of June 19, the Canadian-Australasian Line’s steamship Niagara, laden with a secret cargo of nearly eight tons of gold ingots bound from Auckland to Vancouver, struck one of those mines, slowly flooded by the bow, and sank in 438 feet of water.

The 425-foot-long liner, under the command of Captain Bill Martin, had been entrusted with the gold as payment to the United States for munitions sold to England, which was then at war with Germany. The United States and Japan were not yet involved in the war.

Niagara was carrying 148 passengers and 203 crew members. All had time to escape in the ship’s lifeboats before the vessel foundered. The only casualty was the ship’s cat, which refused to stay in the boat and jumped back on the doomed liner.

A sunken ship with eight tons of gold in its cargo is always a challenge to divers. But a dive to 400 feet was almost unheard of in 1940. But it had been done. In 1932 an Italian dive team successfully recovered gold and silver from the steamer Egypt after it was sunk in a collision to a depth of 410 feet off the coast of France.

This diving effort, financed by the Bank of England and undertaken by a salvage team led by Captain J. P Williams, was facing almost undaunted challenges. Not only did it involve a dangerously deep-water dive, but the divers had to enter the sunken steamer and get to the gold which was locked inside a reinforced steel strong room deep in the heart of the wreck. Not only that but they took on the job in wartime, working in the midst of an un-swept minefield, and battled winter gales during the salvage operation.

The team bought and refurbished an old abandoned coaster, the Claymore from which to work. They spent two months locating the wreck by dragging an anchor through the minefield. They used explosives to blast their way through the steel hull and into the Niagara’s strong room.

To recover the gold nuggets, diver Johnno Johnstone got into a special chamber with an observation window, which was lowered to the wreck. From there Johnstone used a telephone to give directions to a crane operator that lowered a special “grab” from the deck of the Claymore. It was a long slow process, but the system worked. They carefully pulled open the tangled steel until they reached the ingots, and successfully recovered the gold.

Before its sinking, the Niagara was considered one of the luxury liners of the Pacific. Built for the Union Shipping Line in 1912, the liner maintained a regular route between Vancouver, British Columbia and Sydney, Australia. Because of the extreme seasonal weather changes experienced in crossing the equator, the ship was equipped with a special ventilation system designed to warm the rooms during cold weather and offer cooling ventilation while passing through the heat of the tropics.

The ship was unique in another way. It was designed to burn either coal or oil, thus was one of the first “duel fuel” driven steamships in operation. During her years at sea, it was said the Niagara traveled a total of 2,295,000 miles, more than any other passenger ship, during her 27-year career.

The Niagara had one blemish during that long career. The liner was falsely blamed for bringing the deadly Spanish Flu of 1918 to New Zealand. The liner was just three days out to sea when a crew member came down with an illness that was diagnosed as dengue fever. By the time the ship arrived in Suva, Fiji, there were 83 ill passengers and crew. When told the ship had influenza aboard, the Fiji authorities placed it in quarantine and denied permission to berth.

The Niagara steamed on to Auckland. Before docking there the captain radioed that they had the Spanish Flu on board, and that 100 crew members were sick with 24 cases demanding urgent hospitalization. The Minister of Health decided the sickness was regular flu and allowed the liner to enter the harbor.

Within days the Spanish Flu was sweeping New Zealand. While the Niagara took the blame for bringing the pandemic to their country, historians say the pandemic was already in New Zealand before the ship docked. The first six deaths had been recorded in Auckland three days before the Niagara arrived.