History of Alaska/From Department to District (1867-1912)

From Department to District (1867-1912)

Seward's Folly:

The phrase “Seward’s Folly” or “Seward’s Icebox” refers to the United States' purchase of Alaska (Russian America) from Russia in 1867, which sparked much debate between the American people. The purchase was orchestrated by the United States Secretary of State, William H. Seward. The negotiations regarding the purchase of Russian America began in March of 1867, between Seward and Eduard de Stoeckl, a Russian Diplomat who was sent by Russian authorities to negotiate the deal. Stoeckl was a very smart and strategic man who was adamant on the deal going through. Stoeckl wanted the first move in the negotiations to be made by the Americans, as this would give him the upper hand in the deliberation. The notion of buying Russian America was not a new concept as Seward had been anxious since 1864 to speak of negotiations with Russia, as he felt it was an extremely beneficial deal for both parties. When Stoeckl and Seward finally met, Seward immediately took control of the conversation and began to inquire whether Russia would sell Alaska to the United States. After both men agreed on the benefits the deal would bring to their respective countries, Seward needed to seek approval. Seward went to President Andrew Johnson asking for permission to go through with the treaty. Initially, Johnson was not as enthusiastic as Seward was about the purchase and the President thus decided that the decision should be left to the Cabinet. The Cabinet approved Seward’s proposition and authorized him to negotiate a deal with Stoeckl.

Seward began the negotiations by initially offering Stoeckl $5,000,000, then quickly added on an extra 500,000 before Stoeckl even said a word. Prior to the negotiations, Stoeckl had informed authorities in Russia that he was going to try and get anywhere from $6,000,000 to $6,500,000 for the territory, so upon Seward’s offer, the Russians issued a counter-offer of $7,000,000. Stoeckl stood firm with his price after seeing how eager Seward was for the deal, and Seward relentlessly kept raising his offer until finally meeting Stoeckl's demand of $7,000,000. After the deal was decided, Stoeckl tried to add conditional terms to the deal. These terms stated that with the purchase of Russian America, the United States was to take over certain obligations of the Russian American Company. Seward immediately refused this condition, but to compensate for the loss added another $200,000 to his offer. At this time it was not public knowledge that negotiations for Alaska were taking place, thus Seward urged Stoeckl to maintain the secrecy of the matter.

On March 25th, 1867 Seward asked Stoeckl to send the proposed agreement to St. Petersburg, and if a reply was received within six days, the treaty would be signed and confirmed by the Senate before it adjourned. Finally on March 30th, 1867 the treaty was put into its final forms and signed by the U.S. Secretary of State William H. Seward, and the Russian Diplomat Eduard de Stoeckl. It wasn’t until October 18th, 1867 that the possession of Alaska was formally transferred to the United States, marking the successful completion of Seward’s Campaign to purchase Russian America.

When news broke of the United States' cession of Alaska, mixed emotions of opposition and enthusiasm surfaced from the American people. Americans on the East coast were outraged by the treaty because for them the immediate economic benefits were less concrete, while those companies on the West coast saw an opportunity to extend whaling boundaries into the Beaufort Sea. The American Civil War had only ended two years before negotiations began and many Americans felt that the $7,200,000 involved in the purchase could have been spent on more beneficial ways that supported the reconstruction of America. Newspapers like the New York Herald began to refer to Alaska as ‘Walrus-sia’ and ‘Icebergia’ as many believed that all Alaska had to offer was in fact, walruses and icebergs. However, newspapers on the West coast in San Francisco saw that Alaska was not a wasteland, as it offered an abundance of natural resources that would be of great benefit to the United States. The papers compared Alaskan forests to those of Maine and stated that Alaska had better fishing than found in Newfoundland.

Many Americans began to believe that the appropriation for the purchase had been arranged through corruption and that the key figures involved did so for their own personal benefit. Much of the resistance to the treaty stemmed more from the resistance to Seward and President Johnson. Seward supported Johnson while he was on the brink of impeachment, which tainted the treaty for many Americans. Seward began to receive backlash for the treaty as many believed he had been manipulated by Stoeckl to pay such a large sum for the territory and that he had made a huge mistake. The situation began to be described as ‘Seward’s Folly’ or ‘Seward’s Icebox’ as many felt it was an irrational decision made with no real benefits.

Many were skeptical of Seward's ambition to annex Alaska from Russia, it was rumored that Seward had little to no knowledge of the resources the north possessed and that Seward was driven to extend the boarders of the United States. To Seward, the purchase of Alaska was the Americans' gateway to Asian markets. Seward believed that commerce was a great agent of movement and that whatever nation should put commerce into motion shall conduct it with sufficient expansion. This was his hope for the United States. With expansion on the forefront of Seward’s mind, the purchase of Alaska was a stepping stone to creating a Pacific trading empire and commercial route to China. To Seward, the American empire began with Alaska.

Alaska Commercial Company:

The Alaska Commercial Company formed out of the purchase of the territory of Alaska from Russia in 1867. Company records and documents remain, but many were destroyed by a devastating fire at the company’s headquarters as a result of an earthquake in San Francisco in 1906. Today, the company is a retail store which provides groceries and other merchandise to the residents of Alaska and is owned by the North West Company. Originally operating under the title of the “Russian-American Company”, firms operated by Hayward Hutchinson and William Kohl merged to purchase the assets of the Russian-American Company as they were looking to liquidate after the purchase of Alaska by the United States Government. Through this, the firm acquired warehouses, a fleet of merchant ships, and trading posts scattered along the coast of Alaska. In the coming years, a successor company was made, titled the Alaska Commercial Company. The purchase of this company by firms in San Francisco would prove incredibly profitable in the company’s early years.

The early decades of the Alaska Commercial Company’s presence reflected how Americans of European descent intended to capitalize on the natural resources and environment of Alaska. Examples of this can be seen not only in terms of exploiting resources like seals and furs but also by the exploitation of residential indigenous peoples in certain regions of the state. By 1872, after the acquisition of the company was settled, shares were distributed, allocating twenty-thousand shares among members of three firms: The Hutchinson, Kohl Group; The Williams, Haven Group; and The Parrot Group. The main goal of the controlling parties of the company was to secure the Alaskan fur trade and to acquire a sealing license in the Pribilof region from the federal government. Acquiring this license cost an annual price of $55000, and the government would also receive royalties on the pelt. The license was active for twenty years. This action allowed for a massive fur trading operation run by the firm in San Francisco and was quickly opened up to international markets. Furs and seal skins were shipped first to San Francisco, and from there were shipped to be sold in London, the center of the fur trade industry. Fur trading and sealing, the killing of seals for their pelts, were vital to the company's success. Most of the profits from this operation came from the sealing portion of the business. Although the land-based fur trade was profitable, competition from other companies affected their profits. The sealing license, which was granted to the company in 1870, caused the killing of seals at unprecedented levels. In addition to this statistic, seals were being mass-hunted by the local indigenous populations as well. Many residents of southeast Alaska killed seals in vast numbers, and sell them to the Alaska Commercial Company. This became a very prominent source of income for Alaskan residential communities. The success of the business attracted the attention of previous bidders for the assets of the Russian-American Company. Those who originally passed over the opportunity to buy these assets began spreading rumors of unethical practice in accordance with their seal operations, leading to several investigations within the company’s early decades. The company was investigated several times, but none of the allegations brought any evidence of any legitimate unethical practice by the company.

When the sealing license was up for renewal in 1890, the company’s monopoly over the sealing operation in Pribilof was at stake. Since most of the profits during this era came from sealing, a license renewal meant that the company could no longer enjoy this monopoly over the Pribilof operation. By the time of the renewal, shareholders had begun to sell their portion of the company. The remaining shares were bought up by four remaining shareholders of the company: Lewis Gerstle, Louis Sloss, Gustave Niebaum, and Simon Greenwald. The company’s monopoly over the sealing operations in Pribilof ended in 1890. Instead, Congress awarded the lease to a similar San Francisco competitor, the Northern Commercial Company.

The Alaska Commercial Company proved to be much more than a standard fur-trading company. After the government’s purchase of Alaska, there was an absence of local government, as well as minimal federal governance from Washington. In absence of an established government institution, Molly Lee explains that the Alaska Commercial Company served northern residents as “de facto banker, postmaster, doctor, lawyer, and, occasionally, jailer, in addition to carrying out its own trading and sealing enterprises.” The company was also prevalent in supplying groceries and supplies to an influx of miners during the Klondike Gold Rush in the late 1890s.

Alaska’s Gold Rush:

In 1896, a small group of American prospectors and hunters were travelling along the Klondike River in Yukon Territory. Upon the advice of fellow prospector Robert Henderson, the party traveled to a small area just off the river known as Rabbit Creek, later renamed Bonanza Creek, where they discovered a gold nugget on August 17, 1896. It is debated whether the discovery of this Klondike gold was made by George Carmack or his brother-in-law Skookum Jim of the Dakhl’wedi clan, although the former ultimately registered a claim for the gold on August 20 of that year. The news of the strike was brought to the country in July of 1897 with the arrival of a steamship in Seattle carrying the modern equivalent of 30 million dollars worth of gold. The discovery of gold in the Klondike regions of Canada and Alaska initiated a four year long gold rush known as the Klondike Gold Rush, with the Klondike stampede occurring between 1897-98.

The Klondike Gold Rush saw the influx of thousands of Canadians and Americans to the Klondike regions; the Americans were especially driven to claim gold of their own after the severe American economic depression known as the Panic of 1893, which left 43% of the population unemployed. Of the nearly hundred thousand people that came to Alaska in pursuit of fortune, very few made a significant profit from gold mining. On average, a prospective gold miner paid the modern equivalent of $27,000 for his ticket to Alaska, which would far exceed the value a miner was likely to get back in gold. A key aspect that made the journey so enticing was the lack of wealth needed to conduct the mining once arrived. Mining in the states had already become heavily industrialized and required large amounts of initial capital for machinery, opposed to Klondike mining which was still stream side and only required simple hand tools. The cultivation of the area was another expensive task, which for the major town of Skagway cost about $100,000 per mile to the summit of White Pass – the safest and direct route – a distance of approximately 20 miles. Arrival to the Klondike was also no simple task, as the closest large city and travel hub to Alaska was in Seattle Washington. From Seattle, Klondikers would have to travel by ship to reach the northern state and required months worth of supplies of food, heavy clothing, and other sundries to sustain themselves while on their mining expeditions. Routes to the Klondike included the "rich man's route”; taking a ship to the mouth of the Yukon River in western Alaska and navigating a boat more than 2,000 miles up the river to the gold fields, as well as the "poor man's route" which saw a miner travel by ship to Skagway or Dyea in southern Alaska, climb over mountains by foot, and finally build their own boat to navigate over 500 miles of the Yukon River. In 1898, the so-called “Klondikers” caught word of a strike occurring at more successful mines in the Noma Alaska and beyond, inspiring many of the thousands of miners to leave the Klondike as quickly as they had arrived there, in hopes of finding a more accessible, more prosperous goldfield.

The impact of the Klondike Gold Rush lay in the cultivation and population growth of much of Alaska, predominantly the towns of Skagway, Dyea and Dawson, as well as Juneau, Douglas and Treadwell for access to and supply of the mines respectively. The ‘Klondikers’ mined an estimated $22 million US in “gold-bearing gravel,” which would be equivalent to nearly $600 million US today. Seattle Washington benefitted greatly from the Klondike stampede, as the city became a temporary home to many thousands of travellers, where the shops and inns were always full. During the construction process, the White Pass and Yukon Railroad was built, employing some of the 35,000 workers who came to the Klondike region. While the completion of the railroad in 1898 occurred at the tail end of the stampede, its creation helped with the further development of the state in coming years and made the territory more accessible to those miners who chose to remain in Alaska. Along with the railroad, the Klondike Gold rush led to the establishment of a more coherent mail delivery system, as Alaskan Postal Inspector John Philip Clum established over a dozen post offices across over 8,000 miles of the frozen territory in order to better deliver mail to the thousands of miners whose mail had been delayed for months. The gold rush helped to demonstrate the potential value of America’s most northern state to many U.S. citizens and indicated that perhaps Seward’s purchase of the state had not been such a folly after all.

The Klondike Gold Rush, while prosperous for both Americans and their northern neighbours, created a push for control over Alaskan territory infamously known through history as the Alaska Boundary Dispute. Canada’s seventh Prime Minister Sir Wilfred Laurier was determined upon his election in 1896 to secure Canadian territorial claims and turned his attention to Alaska, where he pushed to establish control over two of the most significant mining settlements; Skagway and Dyea. Control over this territory, if Canada could obtain it, would assure access to any other valuable materials that might have existed there, which was largely the cause of the dispute over the Alaskan border. The patrol of the region during the Klondike gold rush by the Northwest Mounted Police served to further agitate Canadian claims to the Arctic territory. This dispute has continued into the 21st century between the nations of Britain, Canada, the United States, and Russia, as control over Arctic territory and resources continues to become an increasingly controversial topic in international affairs.

Development of Infrastructure:

Throughout Alaska's history, there has been a focus on the expansion and the ability to navigate the difficult terrain that has caused many problems over the years. The recurring issue that hindered the development of Alaska was the vast terrain that would prove to be both a blessing and curse as many natural resources could be found there but problems with getting to them. The United States government made a focus to develop infrastructure thus ensuring the land could be used to its full potential.

After the purchase of Alaska from the Russian Empire in March 1867 there was quick movement by the United States government to make the most of the newly acquired lands. There were difficulties overcome by the government before progressive actions could be taken place. One of the difficulties that they had faced was the navigation throughout the region and understanding the topographical challenges throughout the landscape. The early maps of Alaska were very under detailed and were not very high quality, usually showed the peninsula stretching out rather than down and this translated to troubles navigating the waters in the early days as part of the United States, meaning this was an extremely hard place to start a life. After many years of mapping there were many companies that were able to produce very high-quality maps of the landscape, and by 1897 Rand McNally and Company produced a map very close in similarity as we know Alaska today. Map making was the next focus on improving the quality of life in Alaska as there became a new motive to use the land to its full potential. The United States government put out an early geological expedition, however, to have this problem overcome. This providing both a strategical advantage as the land was now able to become a tool and the resources were becoming known to the government.

As the benefits of the landscape became available to profit from, the United States set out to support the expansion in anyway they could to improve the economy in the country and use the new land up to its full potential. The travel into the Alaska was one of the main areas of focus in the development of Alaska. The expansion of Alaska could not move forward until there was safe passage available into the land. Alaska borders on the Canadian Yukon, and the Pacific Ocean, there was a necessity to have a harbour in Alaska as to not need to be passing through Canada with all the supplies going in and out of Alaska. As there was already an existing deepwater harbour, such as Dutch Harbour that is still in use today, that was set up from the Russians, the need was more focused on the development to navigate the waters. The need for this came as the United States gained the land, gain access to enter the Gulf of Alaska, and one way to accomplish this was to start building lighthouses along the coastline. This was achieved by Andrew Johnson in approving the formation of federally funded lighthouses along the jagged coastline of the Alaska Peninsula. This aided the many ships coming into Alaska without the fear of striking shallow or dangerous waters. These lighthouses were the first major step in improving the welfare of Alaska as a newly founded part of the United States, as there were new options for trade coming in and out. This boosted the economy as more ships were able to set sail. As they were only made of wood these short-term structures are all but gone today, with only a handful of these original lighthouses still standing.

The newly founded infrastructure would benefit the growth and development of Alaska as there were new options for the outcome of the new land. The next step in the development of infrastructure was the railway that would sweep across the landscape. The first initial company to try and benefit from the trade via railroad was the Alaska Central Railroad company which started to set up its infrastructure in 1903. Up to this point, there was a main concern for who would be able to get materials into the wilderness to make this possible and the ACR was the first to make it possible. The movement set up railroads was one path that many followed, as the ACR was mainly concerned with the movement of product from the southern parts of Alaska there was still great areas in the North that needed to be covered. One company that was interested in the development of railways was the CPR (Canadian Pacific Railroad) which was looking to put rails right into the heart of Alaska, however, this was never accomplished. This infrastructure was quickly expanding bringing both workforce and supplies into the countryside as forests and mountains were quickly converted to basecamps and railways. This expansion of the railway and the infrastructure was crucial in the initial development of the land, as supplies and trade goods were now flooding into the mainland United States. Goods from the industries such as such as fisheries, timber, and fur pelts were now becoming available from a land that was virtually untapped. This all became available because of the infrastructure that was being developed in Alaska and the development of towns took place. Because of the jobs being created this was all possible as the influx of workers into the new land was now becoming a settler population in which infrastructure was taking place.