The People of Gibraltar
1909 - The Russian Bond - $ 5 Billion Dollars

The RMS Republic
One early winter morning in 1909, the British White Star liner RMS Republic sailed out of New York City with 7oo odd passengers and crew on board and headed for Gibraltar with Captain William Inman Sealby in command. Nicknamed 'the Millionaire's Ship' she was one of the most luxurious of her era - as well as being one of the ugliest.

The RMS Republic

The Russian Bonds
During the early years of the 20th century, the Russian economy was in a shambles. They had recently suffered a humiliating defeat in a war against Japan and the Imperial Government was under siege by revolutionaries bent on radical change. To make it even more awkward there was a little matter of a massive $160 million 5 % Russian Government Bond falling due on the beginning of 1909. An almost certain default was looming in the horizon.

As with most of these almost incomprehensible financial shenanigans the dominant powers of the day, France, Britain and the USA decided that such an event was not in their own best interests. To solve the problem they came up with what was essentially an officially sponsored 'Ponzi' scheme which under any other circumstances would have been considered thoroughly illegal. 

They set up a new 4½ Russian Bond scheduled to be redeemed in 1959. Russia would also be paid a considerable amount of money - or $3 million to be precise - as part of the deal. After various complex negotiations it was decided that this money would be brought over to Europe from the States in the form of gold coins.

The 1909 4½ % Russian Bond

The US White and the Imperial Russian Fleets
In 1907 US President Theodore Roosevelt sent a sizable naval fleet to circumnavigate the globe. It was known as the Great White Fleet. (See LINK) After a year and a half the entire fleet met in Gibraltar on the last leg of their trip before returning home. 

Units of the US Great White Fleet

On the 31st of January 1909, first units of the Great White Fleet began to arrive at Gibraltar harbour where they were surprisingly welcomed not just by their British hosts but by units of the Imperial Russian Fleet and other units who happened to be in the harbour at the time. According to Robert A. Hart in his book - The Great White Fleet; its voyage around the world: 
. . . about this collection of Entente battleships in the shadow of the rock - the British Albion and Albemarle, the Russian Slava and Czarevitch, and three from France in addition to the American sixteen. A young officer spoke of the "musical pandemonium" that resulted when the wind mixed the blare of all the national anthems being played at the same time. There was a smudge on the distant horizon as the German cruisers Hertha, Victoria, and Louise steamed by, ignoring the pageant entirely. ...

Gibraltar harbour on the 31st of January 1909 taken by a Tangier photographer

The Sinking of the Republic
On the 23rd of January 1909 not long out of New York and just off Nantucket, the Republic was hit at right angles by the Lloyd Italiano liner SS Florida. Persistent fog - the main culprit for the collision in the first place - also hindered attempts to assist the badly damaged Republic. Nevertheless apart from those few who died as a result of the collision everybody on board, passengers and crew, were all rescued. The Republic however sank several hours later. She was the largest ship ever to have sunk up to that time.

Gibraltar Harbour
By the 9th of February possibly the greatest concentration of international sea power ever seen on the planet occupied the entire inner harbour of Gibraltar and beyond. Local inhabitants despite being accustomed to seeing their harbour periodically occupied by squadrons of the Royal Navy were nevertheless impressed.  Photographers had a field day and found it easy to flog their work to local postcard publishers. 

The postcards

A few days later, they were all gone and Gibraltar was back to normal. 

The Final Twist
More than a century after these seemingly unconnected events took place, several historians arrived at the surprising conclusion that the Republic had been chosen by the US Government to take $3 million dollars worth of gold coins to Gibraltar. These would have been delivered to the overall commander of the White Fleet who would in turn hand them over to his Russian opposite number for delivery to his Imperial masters. The money was to be used by the Russian Government  to reinforce the belief that the issuing of the new bonds was based on sound financial principles.

Since then salvage operators have estimated that the value of the gold now lying at the bottom of the Atlantic Ocean is probably in the region of 5 billion dollars.