The Pacific Northwest Forum
Volume VIII, Number 1, Pages 2-7
The Alaska's steamship Victoria at anchor in the Nome roadstead the year before she was to have hauled coal from Seward, the Alaska Railroad terminus, to Nome via Seattle.
Photo courtesy of Cliff M. Allen Collection, Alaska and Polar Regions Department, Elmer E. Rasmuson Library, University of Alaska, Fairbanks
Alaska coal stirred political and entrepreneurial enthusiasm during the first quarter of this century. Belief in the vastness and value of territorial coal fueled the fervid Ballinger-Pinchot controversy of 1909-1911. It helped to inspire the building of the federal Alaska Railroad, begun in 1915 from the port of Seward north to Fairbanks, 470 miles through Central Alaska. Earnest private prospecting and mining followed. So did direct and indirect federal assistance. Instead of booming, however, coal mining struggled along. Gradually the hopes for it died. By 1933, only two sizeable mining operations survived, one of them the Healy River Coal Corporation near mile 358 on The Alaska Railroad.(1)
What had happened? Some contemporaries blamed misguided federal policy, a view shared by some historians. Others denounced the reluctance of the Alaska Steamship Company to haul Alaska coal in the export and territorial trades at reasonable rates and on timely schedules. A recent crop of historians has raised doubts about the value and competitive quality of some Alaska resources, coal included.(2)
Each of these justifications for coal's disappointing showing is partly true. But they do not add up to the whole truth. They do not explain the failure of three of the largest enterprises involved in Alaska to establish a coal market from Healy to Nome in 1923. If any three organizations could have pulled off the shipment, the Alaska Steamship Company, the railroad, and the Healy River mine should have.
Alaska Steam was the dominant water carrier to and from the territory. Often it preferred its northbound hauls of coal, lumber and other products to the uncertainty and inconvenience of promoting Alaska resources. But not in this case. The steamship company wanted to develop an intra-Alaska coal trade from the railbelt to Nome. So did The Alaska Railroad. At last completed, rail line offered reasonably dependable, year-round transportation. It was desperate for freight, especially southbound traffic in Alaska products. Low coal rates reflected this eagerness. The Healy River mine was well-run under the direction of dynamic, aggressive Austin E. "Cap" Lathrop. At first the company accepted help from the federal government, as did other early-day railbelt mines. The railroad shared the cost of a trestle bridge and a spur from Healy east to Lathrop's mine, and gave the mine free billing on company freight for a time. "Cap" soon was weaned from subsidies of that sort. His coal was lignite, but unlike a lot of other Alaska coal, it was of good quality for the grade. By 1923 Lathrop was ready to extend his market far beyond the railbelt.(3)
Soon Lathrop and Ralph Lomen, a member of a prominent Nome family, were working on a scheme to lower the astronomical price of coal in the town on Norton Sound. Coal shipped direct from British Columbia or Washington cost a mind-boggling $37.50 per ton at retail in Nome. Healy River lump cost $7.00 per ton aboard ship at Seward. The trick was to get a few hundred tons of Lathrop's coal to Nome for a price that would lower living expenses and raise coal consumption in and around the Seward Peninsula community.(4)
The trick was more easily imagined than accomplished. A direct haul was out of the question, for it involved crossing 600 miles of shallow rivers and mushy tundra, a wilderness virtually impenetrable to everything but dog teams in winter and small boats in summer. At first the Healy River company tried to arrange a shipment north by rail to Nenana, down the Tanana River, down the Yukon, then north from the mouth of the Yukon to St. Michael, the great river's transfer point. The route would have landed coal at St. Michael for $13.00 per ton, or so the Healy River Company hoped. Then ocean steamers would haul the coal across Norton Sound to Nome and beat the existing price.(5)
But it was not to be. The large bar at the Yukon's mouth blocked deep-draft shipments. No existing federal or private light-draft barge and river boat facilities were equal to the task. The railroad itself planned to run its new River Boat Service no farther downriver than Holy Cross, far short of the Yukon's mouth. As it was, the Service strained to handle the existing business. The railroad owned a seagoing barge that could have hauled coal from the mouth of the Yukon or from St. Michael, but no seagoing tug was available. The only practical solution was to ship the coal south on the railroad, then in the hold of an Alaska Steamship Company vessel to Nome, a movement of 2,170 miles. Alaska Steam was eager to handle a cargo lot in a special shipment to Nome, but the small market of about 2,000 tons per year could not absorb that much coal.(6)
Some way had to be found to haul a few hundred tons with Alaska Steam, the only transportation available. The line's regular ship from Seattle sailed directly to Nome instead of following the arc of Alaska's coastline. Alaska Steam refused to consider a detour to Anchorage, the ocean, port closer to the coal than Seward. Tough-minded John H. Bunch, Alaska Steam's traffic manager, estimated that the diversion would require five days. He would not countenance so much delay for the sake of a few hundred tons of sacked coal. Bunch's reactions to the Healy-to-Nome idea were skeptical, but he did offer a possible solution. His suggestion was to load 100 to 300 tons of coal on board the steamship Victoria returning from the Aleutians and calling at Seward, carry the coal to Seattle, and then ship it to Nome on the return voyage, a distance of more than 3,500 miles. He proposed a special rate of $15.00 a ton, $3.65 less than the combined Seward-Seattle and Seattle-Nome rates but still $1.35 more thanthe haulage direct from Seattle.(7)
Bunch wanted the business. He sent telegrams asking railroad officials to name the rate at which they thought the coal would move. If his special rate were too high, what rate would be required? At that point the Nenana River intervened in the negotiations. During all these struggles over the hard facts of Alaska's geography, spring was coming to the ice-bound interior rivers. In May the Nenana awoke. River ice broke up, jammed against the trestle bridge between the mine and the main line, and swept it away. The climate doomed what geography made difficult. By the time the bridge could have been repaired it would have been too late to meet the ship at Seward.(8)
In any case, railroad executives believed that an ocean rate of $10.00, not the offered $15.00, was needed to move the coal. The ocean rate was, after all, just a part of the retail price. Lightering, teaming, dealer's costs, and profits were significant additions. However reasonable from the standpoint of price reduction, the $10.00 rate was equivalent to asking Alaska Steam to haul coal from Seward to Seattle for nothing, then accept a cut of $3.65 per ton on its regular Seattle-Nome rate. Little wonder that Bunch believed the shipment of railbelt coal to Nome to be "entirely visionary and impossible" except in cargo lots.(9)
Here was an instance in which the federal railroad, the biggest ocean carrier, and one of Alaska's best-managed companies worked to expand the territorial economy. The quality of the product was not in question. Nor did they fail for lack of trying. Theoretically, of course, the railroad could have purchased more river transportation, or ordered up the nearest seagoing tug, or built a permanent bridge across the Nenana. In the context of Congressional mood, the railroad's huge construction costs and operating deficits, and its record of past subsidies to private enterprises, none of these actions was practical. Theoretically, Alaska Steam could have taken a loss on the Healy-Nome coal trade, but that was not a realistic expectation.(l0)
Two generations after, the problems of producing Alaskan raw materials are less severe. The difficulties of transporting quality resources through and beyond Alaska have eased. In 1923 the men with hopes for Healy coal unsuccessfully confronted vast distances, a small population's miniscule markets, and a rugged country inhospitable to its primitive transportation.
(1) For a brief discussion of Ballinger-Pinchot and the role of coal in the founding of the The Alaska Railroad, see William H. Wilson, Railroad in the Clouds: The Alaska Railroad in the Age of Steam (Boulder, Colo.: Pruett Publishing Company, 1977), 13-18, 23-31. For federal assistance and documentation of the interpretive issues in this article, see Wilson, ''The Alaska Railroad and Coal: Development of a Federal Policy, 1914-1939," scheduled for 1982 publication in the Pacific Northwest Quarterly.
(2) Ernest Gruening, The State of Alaska (New York: Random House, 1968), 125-36, 225-26, 537, criticizes federal policy, based on statements by Alfred H. Brooks and others. For Alaska Steam, see correspondence between Otto F. Ohlson and others, Dec. 1, 1931 through Jan. 5, 1932, Coal, old file 86, Headquarters Files. The Alaska Railroad Archives, Federal Archives and Records Center, Seattle. For resources, William H. Wilson, 'The Alaska Railroad and the Agricultural Frontier," Agricultural History 52 (April 1978), 263-79; and "The Alaska Railroad and Coal," note 1.
(3) For Alaska Steam, see Wilson, Railroad in the Clouds, 123-31. For the railroad, see ibid, 143-46. For rates, see charts accompanying J,T. Cunningham to Noel W. Smith, Jan. 21. 1927, File 86, Headquarters Files, ARK Seattle; and Francis Joseph Conner, "An Economic Analysis of Alaska's Coal Industry with Particular Emphasis Upon the Perion 1945-64," M.S. thesis (University of Alaska, 1965), 63. For subsidies, see Frederick Mears to Scott C. Bone, June 12, 1922, Box 211, Papers at the Governors of Alaska, State Historical Library, Juneau; and B.H. Barndollar to Frederick D. Browne, May 24,1921, File Coal, Healy River Coal Corp., Headquarters Files, ARK Seattle. For Healy coal quality, see Frederick D. Browne, "Annual Report of the Engineer in Charge. Northern Division," Jan. 27, 1921, p. 6, in Alaskan Engineering Commission, "Annual Report, Calendar Year 1920," File 18-2, The Alaska Railroad-Administrative- Reports-Annual, Record Group 126, Records of the Office of Territories, National Archives.
(4) Fred M. Ayer to Ralph Lomen, Jan. 3, 1923; and Lomen to I.G. Steese, Feb. 31 [sic.], 1923, File 623.1, Headquarters Files, ARR, Seattle.
(5) Ayer to Lomen, note 5.
(6) Steese to Lomen, Mar. 30, 1923; Bunch to Mears, Apr. 12, 1923, Cunningham to Steese, Apr. 16, 1923; and Lomen to Steese, note 5, File 623.1, Headquarters Files, ARR, Seattle. For the Rive'r Boat Service, see Wilson, Railroad in the Clouds, 86.
(7) Bunch to Mears, note 7.
(8) Bunch to Steese, May 8, 1923, and May 12, 1923; and Steese to Bunch, May 14, 1923, File 623.1, Headquarters Files, ARR, Seattle.
(9) Steese to Bunch, note 9; and Bunch to Mears, note 7.
(10) Wilson, Railroad in the Clouds, 136-43, 148.