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Insider: Profiteers on the High Seas Volume 60 Number 4, July/August 2007
by Heather Pringle

The big business of treasure hunting is selling off the world's maritime heritage—and it's perfectly legal.

On the afternoon of October 24, 1865, Civil War veteran William T. Nichols witnessed a scene aboard the steamship Republic more terrifying than many of the horrors he had recently witnessed in battle. While en route from New York to New Orleans, the ship, which was carrying 80 passengers and coins then worth a reported $400,000, sailed through a fierce hurricane, sustaining grave damage. As the wind howled, the vessel lurched sickeningly from side to side, rapidly taking on water. The crew struggled heroically to save it. "I cannot describe in words the impression which [the event] made upon my mind," wrote Nichols, a former army colonel, to his wife. "It was desperation intensified." A day later, Republic sank off the coast of Georgia. At least 14 passengers perished.

A BBC report on shipwreck recently in the headlines

A BBC report on shipwreck recently in the headlines

Settling on the ocean floor, the wreck rested undisturbed for nearly 140 years, preserving rare details of the Reconstruction era, "a brief period of American history for which there are few known shipwrecks," says Robert Neyland, an underwater archaeologist at the Naval Historical Center in Washington, D.C. In the 1990s, however, an American shipwreck-recovery firm, Odyssey Marine Exploration, Inc., began methodically searching for Republic. It sent out a research vessel loaded with remote-sensing gear, and in the summer of 2003, the company finally located wreckage from the ship in international waters at a depth of some 1,700 feet. Under maritime law, salvage companies are permitted to keep the ships they find in international waters, provided no one else claims jurisdiction over the vessels. So Odyssey staked a claim to Republic in a U.S. federal court, obtaining legal ownership. Then, with a remotely operated vehicle (ROV), the firm raised more than 51,000 gold and silver coins from the site, as well as thousands of other artifacts, including hair-remedy bottles, mustard jars, children's slates, and ink wells. To help finance its operations, Odyssey began selling many of these finds to eager collectors, earning millions in revenues. Impressed, Fortune Small Business magazine put the firm on its cover with the headline: "Treasure Inc.: How an Entrepreneur Went Hunting for Sunken Gold—and Found a $20 Million-a-Year Business."

If a private corporation had targeted such an important site on land in the United States and hawked many of its artifacts, heritage activists would have been up in arms, asking hard questions about the commercial exploitation of the country's cultural history. But there was no public protest over the fate of Republic, and very little criticism in the press. Moreover, this was not an unusual state of affairs—treasure hunters often sell off shipwreck artifacts with scarcely a whisper of opposition. As a journalist who has been writing about archaeology for 25 years, I find this disturbing. Why isn't there more of a hue and cry against nautical treasure hunting? Why does this industry seem to operate so freely? In search of answers, I began closely examining the problem a year ago. I found, to my dismay, that we have created a bizarre double standard for terrestrial and marine sites, turning a blind eye to the fate of the world's shipwrecks. In much of the world's oceans, treasure hunting is a perfectly legal enterprise.

Nautical archaeologists have long raised the alarm about this worrying state of affairs, but their warnings have gone largely unheeded. The discipline of maritime archaeology developed after World War II. With the field being so new, many legislators and members of the public still do not realize how much knowledge can be gleaned from the scientific investigation of a wreck, including the conservation and careful analysis of artifacts. The problem is further compounded by public perception: A certain swashbuckling, pirate glamour cloaks the operations of many treasure hunters.

To better understand treasure hunters and their operations, I paid a visit to Paul Johnston, curator of maritime history at the National Museum of American History in Washington, D.C. Since the early 1990s, Johnston, a nautical archaeologist, has tracked the activities of treasure hunters around the world, amassing an impressive archive of business prospectuses, investor contracts, auction catalogues, reports, articles, correspondence, and other documents. Johnston offered to share this information with me, and I gladly took him up on it. Each morning of my visit, Johnston, a burly man with alert, dark eyes and thinning, gray hair, greeted me at the museum's security checkpoint and led me up to his office. Decorated with prints of sailing ships and a map from his recent excavation of the sunken yacht of King Kamehameha II in Hawaii, it was kind of a shrine to the nautical world.

Johnston's files revealed the broad spectrum of treasure hunting—from small fly-by-night operations to large sophisticated corporations whose directors include wealthy European nobles. And as we discussed the main players, Johnston mentioned two major trends in the industry he had noticed. "I definitely see a major movement toward deeper-water search and recovery," he said, leaning back in his chair. For many years, treasure hunters stuck mainly to the shallows, where divers equipped with scuba gear could work easily. But increasingly, firms are shifting their focus to wrecks thousands of feet below the surface. There they retrieve gold coins or antique porcelain dishes by using ROVs equipped with video cameras and manipulator arms, all under the watchful eyes of highly trained technicians. And the steep cost of deepwater operations has led directly to the second trend that Johnston observed. "I see a more businesslike approach to treasure hunting," he told me, "where charismatic individuals are being replaced by corporations who have great funding and great technical ability."

Johnston could not say with certainty how many of these firms are currently combing the sea floor in search of wreck sites. Some companies operate in secrecy, only publicizing their activities when their finds go to auction. He estimated, however, that "there are probably somewhere under a dozen serious treasure hunters worldwide." While some employ archaeologists to assist in their operations, these researchers contribute relatively little to scientific knowledge of ancient seafaring and ship design, as compared to publicly funded archaeologists.

Let me give an example. In the late 1990s, Texas A&M archaeologist Filipe Castro and his colleagues excavated the wreck of a seventeenth-century merchant ship off the coast of Portugal. Since then, Castro has diligently attempted to reconstruct the vessel from hull to rigging, and test its seaworthiness—something no treasure hunter has done, due to the grinding, time-consuming analysis required. In pursuit of this goal, Castro has published two scientific books and 26 articles on the wreck, and has completed six archaeological reports. His students have written a master's thesis and a doctoral dissertation on related topics, and Castro continues to study the wreck, presenting his findings in scientific journals. By contrast, Odyssey Marine's work on Republic is little known to the archaeological community—even though, as the company cofounder, Greg Stemm, pointed out to me, "Our budget on a monthly basis is more than the Institute of Nautical Archaeology's annual budget [at Texas A&M University]." To date, Odyssey's scientific staff has published just one book—on bottles recovered from the ship. Of the five reports they have written on Republic, none appears to have been published, although the company says it plans to post them online. Moreover, Odyssey has now moved on to other shipwreck projects, the most notable being the search for a treasure-laden seventeenth-century British warship, HMS Sussex, off the coast of Spain.

At heart, says Larry Murphy, chief of the Submerged Resources Center in the National Parks Service, Odyssey and other such firms are about turning a profit. "What's going on is that you are excavating sites under a commercial timeframe, making commercial decisions about profit and loss, and you are collecting artifacts for sale."

Just how much of an impact has the treasure-hunting industry had on the world's underwater sites? It's a difficult question to answer because no one has ever compiled statistics on the total number of sites worldwide and the number that have been damaged or disturbed by treasure hunters. But archaeologist Don Keith, president of the Ships of Discovery research institute at the Corpus Christi Museum of Science and History, thinks that the movement of treasure hunters into deeper waters is a very worrying sign. Indeed, one study that he and colleague Toni Carrell completed suggests that treasure seekers have so depleted shallow-water wrecks that they are now increasingly forced to target ships lying far below the surface. It's a situation, explains Keith, that parallels the excesses of the oil industry. Just as in oil prospecting, once you have found all the easy-to-reach fields, you have to spend a lot more money to find the difficult, hard-to-work ones.

Keith is known among his colleagues as a thoughtful and deliberate man, with a wry sense of humor. Like many in his profession, Keith has long worried about the toll that treasure hunters are taking on the world's historic shipwrecks. In 1998, he read a Scientific American magazine article explaining how petroleum geologists estimate the amount of oil left in the ground, and it dawned on him that he could apply the same technique to gauge the number of shipwrecks left in the seas.

shipwreck graph Is the world running out of shipwrecks? One recent study shows that in three parts of the world—coastal Florida, Sussex County in England, and along the various trade routes of the East Indiamen ships—half of all known shipwreck sites were discovered before the mid-1970s. Borrowing a mathematical model developed for the oil industry, the study suggests that shipwrecks are a rapidly declining resource. [LARGER IMAGE]

During the 1950s, American geophysicist Marion King Hubbert set out to learn how much petroleum remained in the lower 48 states. In 1956, he observed that the volume of oil that a particular oilfield produced tended to form a predictable bell curve over time. Peak production occurred once about half the crude in a given field was exhausted; after that, the rate of oil extraction started tapering off. So Hubbert developed a mathematical model to forecast when this halfway point would be reached. Today, geologists can gauge the decline of oilfields in a region by using the Hubbert Model.

To examine the situation with shipwrecks, Keith and Carrell began searching for regional statistics on the numbers of discovered wrecks and the dates on which they were found. They came up with detailed figures for two geographical regions—the coasts of Florida in the United States and the waters off Sussex County in England—as well as the famous trade routes that East Indiamen ships once plied between Europe and Southeast Asia. The pair then applied the Hubbert Model to all three statistical sets, which covered the period from 1960 to 1998. "In each case," says Keith, "the curve for shipwreck discoveries came out showing that the time between 1974 and 1976 was the peak." Such findings, he suggests, point to the immediate need for strong conservation measures. "We concluded that more than half of the shipwreck sites that will ever be found have already been found. So the resource is being depleted very quickly, and when it's gone, it's gone." Indeed, Keith and Carrell's data suggest that at the current rate, all wreck sites off the coasts of Australia, Europe, Great Britain, Canada, the United States, and in the Caribbean islands will have been found and exploited in just another 30 years.

I think Keith and Carrell's study shows clearly why treasure hunters are spending so much money to recover artifacts from deepwater sites. Just as oil companies now invest heavily in wresting crude from costly sources such as the Canadian tar sands, commercial salvors are now increasingly forced to look for historic shipwrecks in some of the most inaccessible parts of the ocean. During the 1960s, treasure hunters spent just a few dollars a day hunting for gold coins on a fleet of Spanish galleons that sank in shallow waters of the Florida coast. Working Republic—with ROVs, a crew of 40, and all the other technology—cost tens of thousands of dollars a day.

So how do treasure hunters raise enough money to chase after the world's ever-diminishing number of shipwrecks? As we sat over lunch in the museum's staff cafeteria one day, Paul Johnston offered a colorful primer. Generally, he explained, small private corporations target affluent investors. As the prospectuses in Johnston's files disclose, they focus on individuals who earn more than $200,000 annually and who possess a net worth exceeding $1 million—people who can readily afford to lose their investment. Often, says Johnston, the owners of these companies call on affluent friends to help round up prospects. In one case, Johnston wangled an invitation to a private event held for Robert Marx, a legendary treasure hunter who claims to have found a Roman ship off the coast of Brazil. The hostess, says Johnston, "was a wealthy Philadelphia woman with strong social connections. As I remember, she was some kind of princess, from a deposed Eastern European monarchy." At the gathering, Marx "showed a movie of his work, told some stories, then said he was looking for another ship and that it would be a good investment opportunity, although you could lose every penny. Then he told the story of the ship, with some embellishments."

Blessed with charm and the gift of gab, successful treasure hunters often possess an uncanny ability to latch onto investors. For more than 20 years, legendary shipwreck-seeker Mel Fisher searched for Spanish galleons off the coast of Florida, before finding the gold-laden Nuestra Senora de Atocha in 1985. But Fisher, who died in 1998, was almost equally renowned for his prowess in attracting investors. He'd hunt for them as they bent their elbows in the bars of Key West, and as they languished in senior-citizen homes. As Cheryl Ward, an underwater archaeologist at Florida State University told me, Fisher made a point of carrying a gold doubloon in his pocket. When he'd meet someone for the first time, he'd drop it and let his acquaintance pick it up. "He said when people touched it, they got gold fever," recalled Ward.

For these investors, Fisher often brandished a contract lasting just one year. In it, he agreed to pay .01 percent of the treasure he raised in one field season in exchange for an investment of $1,000. All payouts were to be made in treasure, as opposed to cash, and Fisher was under no obligation to raise all the gold he found in one year. Shortly after he found Atocha, Money magazine investigated the soundness of such investments. While Fisher claimed, for example, that the Atocha treasure was worth $400 million, Money concluded that this figure was "almost surely wrong." All estimates of the treasure's worth were supplied by Fisher or an associate, and were based on the prices that starstruck tourists paid on impulse for coins in Fisher's small museum gift shop in Key West, a place Money called, "the retail bull's-eye." But the Atocha treasure commanded considerably lower prices in independent coin shops, perhaps as little as 6 to 25 percent of the gift shop prices. This was particularly bad news for Fisher's investors who had to sell their payout—items of treasure—on the open market.

By contrast, the large treasure-seeking corporations conduct their financial affairs in a more conventional manner. Odyssey Marine Exploration, for example, is publicly traded on the American Stock Exchange, and files regular reports on its activities to the Securities and Exchange Commission. These documents brim with details of complex financial maneuvers and a network of subsidiary companies. And as befits a large private corporation, Odyssey is hungry for profit and open to partnerships. In 2002, the firm signed a highly controversial deal with the British government to find and recover artifacts from HMS Sussex, a British naval vessel that is reputed to have carried more than $1 billion (in today's dollars) worth of gold and silver when it sank in 1694. If Odyssey is successful, it will split part of the proceeds with the British government—a troubling precedent, I believe, for a country that once prided itself on its naval and maritime heritage.

Almost six years ago, the general conference of the United Nations Educational, Scientific and Cultural Organization (UNESCO) recognized that shipwrecks lying in international waters were in grave peril. It voted in favor of adopting a new international treaty to safeguard them, the Convention on the Protection of the Underwater Cultural Heritage. Among its many provisions, the convention states that "Underwater cultural heritage shall not be commercially exploited," and it directs signatories to impose sanctions on those who violate its measures. To date, 14 countries, from Spain and Portugal to Panama and Mexico, have ratified the convention—another six must do so before this treaty can take effect.

The convention is not an ideal solution, but it is certainly a major step forward for those intent on protecting the nautical past. Even so, many of the world's leading maritime nations—including the United States and the United Kingdom—have yet to ratify it. And as these governments drag their heels, the clock continues to tick on the world's sunken ships. It's time to put science ahead of the Almighty Dollar, and cultural heritage ahead of the bottom line of private corporations. If we don't, we will truly be missing the boat.

Heather Pringle is a freelance science journalist and author of Master Plan: Himmler's Scholars and the Holocaust.

© 2007 by the Archaeological Institute of America