The Niagara was lost on Saturday evening, June 4, 1904, at Knife Island, Minn. On that day, the Niagara was headed to Duluth from Sault Ste. Marie to tow the marine construction equipment of Hugo & Tims to Lake Huron. It was steaming in heavy seas and poor weather when it ran up on the island. Apparently, the compass was malfunctioning due to the magnetic attraction of the shoreline and the Niagara was in the breakers along the shore before the island was even seen. The engine was quickly reversed but the Niagara was driven onto the rocks by the trailing seas and wind. It was pounded heavily by the waves and soon began to break up. The Niagara's distress signals were heard in a village at the mouth of the Knife River and the telegraph operator there telegraphed Two Harbors, Minn., for help. The tug Edna G. was dispatched and quickly arrived at Knife Island. The eleven crewmen and two passengers aboard the Niagara were rescued just before it began to break apart. The only injury was to Mrs. A. Merritt who cut her hand on broken glass while escaping from her cabin.