This is a wonderful story illustrating the early settling of New Haven - the hardships they endured, the plans they had to prosper, and the outcome. I have reproduced the story here - from the book Legendary Connecticut by David Phillips

The Phantom Ship of New Haven

THE REPUTATION AND worldly wealth of the Rev. John Davenport, Samuel Eaton, Edward Hopkins and others from the city of London who were determined to establish a "plantation" in New England in the mid-1630s were such that the people of the Massachusetts Bay Company sought their presence with unabashed enthusiasm. But, while Charlestown made them "large offers," and Newbury offered to give them the whole town, the Rev. Davenport's congregation wanted to plant a distinct colony. Thus, in the spring of 1638 a very distinguished group of Englishmen arrived at the head of the shallow harbor formed by the confluence of the Quinnipiac, Mill and West Rivers and began a settlement soon to be known as New Haven.

Although the original colonists were shortly joined by others from the general London area, the New Haven colony did not flourish according to the great expectations of its founding families. Competition in trade from the high-powered merchants of Boston to the north and the canny Dutch of New Amsterdam to the south sapped the wealth of the New Havenites. As a spiritual leader of the colony, the Rev. Davenport prayed fervently and often for an improvement in their fortunes and as political leader sought to enhance the colony's competitive position by a 1644 order that all males between the ages of sixteen and sixty spend four days shoveling mud out of the harbor to increase the channel depth for larger, deep-draft ships. But in those early years the economic path lay mostly downhill, despite all the efforts of God and man in New Haven.

Finally, in 1646 a group of New Haven merchants, banded together as the Shippe Fellowship Company, engaged a Rhode Island builder to construct a ship which they hoped would reverse the colony's trade decline. By January, 1647, the 150-ton cargo vessel had been loaded heavily with about all the tradeable goods the people of New Haven could scrape together; more than a half-dozen of the colony's most prominent citizens were aboard for the trip; and the maiden voyage of "The Great Shippe" was ready to begin. But because the members of the company were better businessmen than they were sailors, the obstacles in the way of a successful journey began before the ship left the dock.

In the first place, January was probably the worst month of the year in which to venture forth on the North Atlantic. In fact, the vessel was iced in so solid at her pier that a three-mile channel had to be hand-chopped through the ice before the "Great Shippe" could reach the open waters of Long Island Sound. Worse yet, the ship had to be towed stern-first through the ice, causing near-mutiny among crew members, who universally believed that beginning a voyage backward was a bad omen.

Worst of all, once the vessel finally reached the choppy waters of the Sound, it had a disconcerting tendency to roll at a frightening angle. Even the ship's master, George Lamberton, an experienced mariner, predicted many times that the "walty" (unstable) ship would "prove their grave." But, despite all the errors in judgment and signs of doom, the "Great Shippe" finally sailed into the icy mists of Long Island Sound, the tears and fears of the large group gathered to see them off echoing only faintly astern. After all, crew and cargo were under the protection of Divine Providence, to whom the Rev. Davenport had raised his glorious voice in prayer as the ship weighed anchor: "Lord if it would be thy pleasure to bury these our friends in the bottom of the sea, they are thine; save them!"

With the fate of the New Haven colony -- not to mention the lives of many of her most influential citizens -- riding on a successful voyage, little wonder that news of their trading ship was awaited with the keenest anticipation by the people of New Haven. Each new arrival from England was questioned anxiously, but the winter months passed, spring moved toward summer and no tidings of the vessel's fate reached the Connecticut settlement. As a contemporary chronicler said, "New Haven's heart began to fail her: This put the godly people on much prayer, both publick and private, that the Lord would (if it was his pleasure) let them know what he had done with their dear friends."

Then, on a humid June day, some six months after the "Great Shippe" had departed, New Haven was struck by a very heavy thunderstorm that rolled in from the northwest in the late afternoon. An hour before the late June sunset, the storm had passed and the air was calm, but the towering thunderheads still hung over the harbor mouth and the Sound to the south of the village. Soon, a rumor spread which turned New Haven into a joyous community of thanksgiving: their lost ship had been sighted emerging from the clouds in the harbor and driving toward the settlement with all sails set and flags flying. Scores of people rushed to the waterfront to witness this miraculous answer to their prayers.

The goodly assemblage watched in hushed awe as the full-rigged vessel, riding a sea of clouds, sailed majestically toward them, a strong wind billowing her sails -- even though she was evidently running into the prevailing northwesterly breeze. Then, as the vessel came as close to shore as the water depth allowed, the main topmast seemed to break off, fall and become entangled with the lower sails. As dusk approached, it appeared to the spectators that other spars, masts and sails began to carry away, until the specter ship became little more than a derelict hull. Many said that they saw a human figure on the bow of the vessel, sword raised and pointing toward the sea, just before the ship finally rolled over on her side, shuddered once and disappeared into the mists that surrounded her.

From the time of the ship's first appearance to her evaporation in the fog, perhaps thirty minutes had elapsed. Since all of the remaining clouds dissipated and the atmosphere became clear before complete darkness set in, the mystified onlookers sought some sign of wreckage or debris in the now calm waters of the harbor. They found none.

All who bore witness to the events in New Haven harbor agreed, however, that the ship they had seen was, indeed, their own "Great Shippe" and that God, in his inscrutable way, had explained to them what her fate had been. While the Rev. Davenport exhorted his congregation to rejoice and thank God for the "extraordinary account of his sovereign disposal" of their friends and relatives, the loss of the "Great Shippe" almost rang a death-knell for the infant New Haven colony. A hundred years passed before the Connecticut plantation could bring itself to build another trading vessel for trans-Atlantic commerce.

from Legendary Connecticut by David E. Philips / ISBN 1-880684-05-5 / $17.95