Canadian Historic Sites: Occasional Papers in Archaeology and History No. 26

Grubstake to Grocery Store: Supplying the Klondike, 1897-1907

by Margaret Archibald

The Artery: The Yukon River Trade Before 1896

There is a certain peculiarity in the identities of those who came to exploit the Yukon River. On one hand were the companies, huge corporate concerns, whose deliberate policies of exploration, trade and mining were formulated in offices thousands of miles away. On the other hand were the individuals, the prospectors and traders who were just as deliberately spending their lives on the wilderness frontier, searching for the streak and continually pushing on. One tends to think of them as opposites, the corporate citizen and the adventurer. The irony is that the foundation of Yukon trade patterns was laid down by their harmonious relationship. The dichotomy of the mercantile character, corporate and individual, is part of a theme which carries on through the years of Yukon merchant activity.

Commercial activity along the Yukon River may be divided into three phases. To the first belong the separate spheres of trading and exploration by the Russian and British empires. The second period extends from the sale of Alaska to the United States in 1867 until roughly 1886. It includes the opening of extensive river commerce and the subsequent growth of the single most influential trading concern along the river, the Alaska Commercial Company of San Francisco. The transition from this to a third phase is marked by a diversification of trade and the change of the accepted medium of exchange from pelts to gold dust.

The period after 1886 is marked by the sudden influx of a new wave of gold prospectors and the overnight blossoming of gold-rush towns. The resulting mercantile operations focused on these settlements, which sprouted wherever gold-rich streams found their way to the Yukon River. Each of these boom towns acted as a pump, circulating trade goods needed for survival from the mainstream of trade into the surrounding placer operations, and then replenishing the mainstream with gold. This pattern was played out with increasing intensity as the persistent seekers scanned every possible stream in the network.

The town of Stewart was the first of the gold-boom communities; it sprang up at the confluence of the Stewart and Yukon rivers in 1886. The following year it was Forty Mile, just east of the boundary between Alaska and the Yukon Territory. After 1893, Circle City bloomed between the headwaters of Birch Creek and the Yukon River. In 1896 and 1897, all these towns were deserted for the greatest El Dorado of them all, Dawson. Even Dawson did not break the cycle of growth and contraction; Nome drew off Klondike miners in 1899 and the Tanana district (Fairbanks) did the same in 1903.

More than a century before gold was unearthed in the Yukon valley, two Siberian merchants, Shelekhov and Golokhov, started a fur-trading company.¹ By 1796, 20 years after its inception, the firm had overcome all competitors in the business of harvesting pelts on a permanent basis in the Aleutian Islands. In 1799, it obtained from Czar Paul I a 20-year charter as the Russian American Company. Within three years, trade in all phases of the enterprise, including shipbuilding, hardware manufacture and fresh provision supply, had become so brisk that the czar and two members of his family were encouraged to buy shares.²

Meanwhile the Hudson's Bay Company was engaging in a parallel fur trade on the outer rim of the Russian territory. These British traders ventured from an inland base into the Yukon valley, over the divide which separated it from their own Northwest Territories. In 1840 Robert Campbell, commissioned by the company, followed the Upper Liard River to the height of land, descended the Pelly River to its confluence with the Yukon and returned.³ Eight years later he established Fort Selkirk at the mouth of the Pelly. In 1852 this fort was razed by incursive coastal Indians who found Campbell's post was upsetting their own interior trade monopoly,⁴ and no further trading was done by the Hudson's Bay Company in the area. In the meantime, the company had penetrated the country by a second route, descending the Porcupine River from the Mackenzie Delta and Rat River. In 1847 another of the company's trader-explorers, A.H. Murray, built Fort Yukon where the river takes its great bend to the south at the Arctic Circle.⁵ While the fort was undoubtedly on Russian territory, trade continued unimpeded, since business was not going well for the Russian company. Several Indian massacres, financial troubles and failures in gold prospecting caused the Russian American Company to lose first its control of territorial frontiers and eventually (in 1862) its royal contract.⁶

This period of exploration gave Europeans of two trading empires their first glimpse of the Yukon valley. Neither company had much to do with gold in the area. Robert Campbell knew that it existed near Fort Selkirk, but he could never spare time from his post duties to explore for it.⁷ The Yukon waterway was not really exploited as a commercial artery until 30 years later, for until then the discovery of substantial deposits of gold did not outweigh the hazards of climate, unfriendly natives — who, naturally enough, had a trading system of their own to keep up — and possible rivalry from other encroaching trade empires.

The era of river-based enterprise may well have dawned in 1867, when the United States acquired both Alaska and the defunct Russian American Company, the first by purchase, the second by transfer. These two dramatic exchanges were announced within hours of each other. Together they radically altered the commercial shape of the ice-bound territory. The first step toward shifting the machinery of the Bering trade to the Yukon valley came with the purchase of the Russian American Company's assets for $350,000 by Hutchison, Kohl and Company, a group of merchants based in San Francisco.⁸ At first the company maintained its primary interest in whaling, but soon afterward, when it was incorporated as the Alaska Commercial Company (the AC Company) its interests grew to include fishing, canning and Yukon River transportation and trade as major activities.⁹

Potential competition posed no immediate threat. The Pioneer Company, composed of American and French-Canadian merchants, established a trading station some 12 miles below the fork of the Tanana and Yukon rivers in 1868, but it lasted only one season.¹⁰ Those of its traders who wanted to continue their Yukon ventures did so by turning over their services to the AC Company.

In turning their sights away — though by no means totally — from the Bering Sea to the Yukon River, the American firm was determined to make its grip on the interior more effective than that of the Russians. In considering the 2,000-mile valley as a means of access to a potential economic colony, the company was far more sensitive to the nearby commercial presence of the British than its predecessor had been. After all, the heart and headwaters of the river itself lay indisputably within British reach. In 1869, the Hudson's Bay Company received its first and only warning from this ambitious young company. It was ordered to abandon Fort Yukon, which for 22 years had sat, illegal and unharrassed, first on Russian and then on American territory.¹¹

The monopoly was secured beyond a reasonable doubt, and as if to prove and proclaim the fact, in the year of its ultimatum to the Hudson's Bay Company, the AC Company's first steamer, Yukon, puffed its way from Saint Michael on the Bering Sea upriver of the abandoned Fort Yukon. There it deposited a veteran trader, one Moishe Mercier, to carry on the exchange of trade goods for pelts. There was a significant series of arrivals at the post in 1872-73; Arthur Harper, LeRoy Napoleon (known as Jack) McQuesten and Al Mayo, all of them seasoned prospectors, came into contact with Mercier and the company.¹² It was the Quebecois Mercier who convinced these men to enter the employ of the AC Company, as he had. He must have made the company seem attractive, for they followed his advice and sent back to Saint Michael for supplies. They prepared to support their personal exploration and prospecting by trading for the company.¹³ By 1875 all three were on the company payroll and were stationed at Fort Reliance, about six miles south on the Yukon from Dawson's present site.¹⁴ They were destined to be among the valley's best-known inhabitants.

During these years the company established similar agreements with many independent prospectors. They were placed on the books for a yearly receipt of goods at a given post on the river. These goods they received at prices 25 per cent above San Francisco wholesale prices and could sell as they saw fit.¹⁵ With this kind of backing, McQuesten and Harper formed a partnership in 1875 which was to last 17 years.¹⁶ They were joined in 1882 by an upstate New Yorker, Joseph Ladue, who was persuaded (as they had been) to support his profession of prospecting by trading for the AC Company.

These fur traders were not alone in their search for "good colours" along the gravels of the Yukon and its tributaries. While the Russians had failed to unearth gold, and the Hudson's Bay traders had been indifferent to it, these prospector-traders were part of a new breed which was picking its precarious way over the Pacific mountain ridge in search of the mineral which was traditionally found in its shadow. Many were veterans (as was Joseph Ladue) of a long search which led from strike to strike across the continent in search of the mother lode.¹⁷ For many, the pursuit had followed a trail along the continent's northwestern backbone, from California in 1849 and Cariboo in 1860 along the Stikine to the Cassiar in 1867.¹⁸

The fact that the wayward lode might meander even further north must have occurred to many. It was a matter of braving the combined hostility of terrain, climate and mistrustful natives. The Hudson's Bay Company had entered the territory from the Mackenzie River, the AC Company from the Yukon's mouth. To the exploring prospector already interested in the northern mountainous interior of British Columbia, one of the closest alternatives was access to the river's southern headwaters from the coast. The route offered an immediate — but by no means easy — entry to the gold-bearing territory through two possible passes, later known as the legendary Chilkoot and White passes. These led in land from the Lynn Canal on the Alaska Panhandle across the coastal range to the edge of Bennett Lake, and eventually to the Yukon River itself.

The pass north of Dyea, the Chilkoot, was probably first explored by a white man in 1875 when an American, George Holt, entered the Yukon district by that route. This scaling of the Chilkoot by a goldseeker boded well, for Holt was able to report ample deposits of coarse gold on the other side.¹⁹ In this way began the trickle of searchers who would systematically comb the Yukon River basin, stubbornly making their way up each of its potential tributaries. The Lewes, the Big Salmon, the Pelly and eventually the Stewart rivers were explored with a determination which was maintained as long as each stream was productive. Until 1886 the Stewart River was the most rewarding find. In that same year, however, Franklin and Madison made a promising strike in the Forty Mile district, and miners rushed from Stewart to the new diggings with the predictable fickleness of good gold prospectors.²⁰

Obviously the basis of trade shifted significantly under the impact of gold and goldseekers. Fur was still a staple product of the hinterland, but gold was superseding it as an economic base wherever it was discovered, especially since the larger quantities yielded by the newly discovered gravel beds could support whole communities rather than isolated knots of prospecting partners, George Dawson, the Canadian government geologist who conducted a survey of the territory in 1887, estimated that the Stewart River alone had produced over $100,000 in gold.²¹ He estimated the district's total white population to be 250 that year²² — an insignificant number in the Yukon's vastness.

The rising population of miner-consumers was served by the same basic shipping and distribution mechanism which had served the AC Company's fur traders. Steamers from San Francisco transshipped goods at Saint Michael to the company's fleet of river sternwheelers (consisting of the Yukon, the St. Michael and the New Racket by 1883)²³ which held together the chain of supply points along the river. The process of supplying goods, however, had its problems. In essence what the company had to cope with was a series of localized population explosions which yearly upset estimates with needs that outstripped actual supplies. The problem was intensified when a discovery was made too late in the season for sufficient supplies to be ordered before shipping ended for the year. Such was the situation at the Stewart River in 1886. Although the company had anticipated early in the year the heavy demands which would likely be made that coming winter and had accordingly sent in extra provisions,²⁴ it had miscalculated the number of determined miners who were willing to endure a Yukon winter. It was weeks after the ice had choked the water route that Harper, the local agent, realized his plight. Supplies were short and the community would be landlocked for an other six months. Harper's appeal for more supplies was relayed over the Chilkoot pass where it managed to reach a southbound steamer harboured in the port of Dyea.²⁵ The Post's supplies were (fortunately) replenished.

The growth of gold-mining communities remoulded the inner workings of the trade. The most radical changes involved the use of gold dust as currency and the exercise of extensive credit. Basically, an ounce of gold rather than a pelt became the currency unit and the medium of exchange at an accepted value of $17.²⁶ With nothing but gold dust to barter, and with most of his capital invested in the initial purchase of the necessarily large survival outfit the miner saw few coins or bills. The dust which was used as currency was traditionally carried in a buckskin "poke" or bag which was offered to the merchant to be weighed before purchases were made. Most customers had their own sets of scales, in addition to those kept on hand by the storekeepers. "So adept does one become in a short time," declared one miner, "that it takes but little longer to make change than with coin."²⁷

One of the most significant features of the trade along the gold-producing creeks was the credit which was often extended to a placer miner each season. In the form of winter rations, it tided him over the unprofitable season until gravel panning was again possible, and the gold from the large spring "cleanup" could be used to buy more supplies. This liberal seasonal credit or "grub-stake" system, an economic necessity, was based on a principle which underlay a whole morality in those isolated northern settlements. Trust and honesty between individuals were imperative in a country which would have no mercy for anyone abandoned by the community. There had to be a strong and accepted ethic as a basis for sheer survival.

The storekeeper's role was a responsible one in such an interdependent community. In his calculations of a good credit risk he would have to be an excellent judge of character. To those he grubstaked, he served as partner, benefactor, banker (a position of confidence) and agent between the miner and the assay office in San Francisco.²⁸ His experience both in prospecting and exploring could provide invaluable advice and, no doubt, sought-after companionship during the interminable winter.

The responsibility of the trader to his clients demanded probity. If he cheated them, he was inviting disaster in the form of speculation in limited quantities of supplies. The parent company staunchly upheld such responsibility as a principle.

Our object is to simply avoid any possible suffering which the large increase in population, insufficiently provided with articles of food, might occasion....

In this connection we deem it particularly necessary to say to you, that traders in the employ of the Company, or such others as draw their supplies from the stores of the Company, doing business relations with such parties must cease, as the Company cannot permit itself to be made an instrument of oppression towards anyone that they may come in contact with.29

Individual agents, as well as company policy, were responsible for upholding a code of justice and honesty. When Harper's post was so short of goods during the winter of 1886, it was a credit to that man's integrity that the remaining supplies were evenly divided per capita for each miner to retrieve, whether or not he had the gold dust for payment.³⁰

Perhaps the man who made the most indelible impression on the collective memory of the pioneer prospectors along the Yukon River was Jack McQuesten. He and his partners Harper and Mayo moved from the boom town of Forty Mile in 1888 to a location farther north, where McQuesten was sure that outfitting prospectors on the nearby Birch Creek would pay off.³¹ His gold-seeker's intuition was correct, and, in 1893, the year of the Birch Creek bonanza, he constructed his imposing two-storey log store on a site which would become the Yukon River's newest boom town, Circle City.³² The most remarkable feature of this operation was the unlimited credit which he extended. While it was customary to extend credit to a man whom someone would guarantee, McQuesten's books were said to contain the names of anywhere from half to all of Circle City's population at one time or another.³³ It was also said that the unbelievable sum of $100,000 extended to miners in the season of 1894 was completely repaid in the following year.³⁴ As long as the local creeks were brimming with gold, and the San Francisco offices were willing to fill his enormous orders, McQuesten remained the merchant prince of Circle City. As one correspondent put it, "as in the case of that other great monopolist, the Hudson's Bay Company, a nominal indebtedness did not imply an actual loss, only so much less profit."³⁵

The river trading post served the community in a variety of ways. Take, for example, the case of Circle City. The town was built in American territory, but far away from any official control. McQuesten's store served in such public capacities as library, bank, post office and courthouse. The latter two functions were symbolized by the presence of both the American flag and a yardarm (in case of hangings) on the store's frame. Along with whatever notices, official or otherwise, posted at the time, McQuesten's store wall displayed the following threat, directed to the most thoroughly despised offenders under the northern code:

NOTICE
TO WHOM IT MAY CONCERN

At a general meeting of miners held in Circle City it was the unanimous Verdict that all thieving and stealing shall be punished by WHIPPING AT THE POST AND BANISHMENT FROM THE COUNTRY, the severity of the whipping and the guilt of the accused to be determined by the Jury

SO ALL THIEVES BEWARE!³⁶

Circle City managed its own justice. Forty Mile, however, was in Canadian territory, and it was the first gold-rush community to have its autonomy supplanted by the law and order laid down by the North-West Mounted Police. The way was paved for the first detachment by the incorruptible Inspector Constantine, who established the first post across the mouth of the Forty Mile River from the townsite in 1895. The illegal whiskey trade, which was allegedly another of the peripheral services offered by McQuesten and Company, managed to continue unchecked at Circle City. After 1895, however, those company traders working in Canadian territory had to restrain such elements of their extensive operations.³⁷

As for the prices charged by the AC Company's traders, one may quote William Ogilvie's report from his Yukon survey in 1887. Ogilvie puts it succinctly: "their prices for goods in 1887 were not exorbitant, yet there must have been a fair profit."³⁸ The price of flour, the cheapest and most common staple, declined considerably over this period (from $17.50 for 100 pounds in 1873 to $12.00 in 1897)³⁹ while the prices of other staple articles, such as bacon, sugar and tea, remained relatively steady, declining only slightly over the same period. Of course shortages tended to make staple prices shoot up far beyond the average. Constantine reports paying $80 for 100 pounds of flour during the 1896 winter of rationing at Forty Mile.⁴⁰

Basically, the Yukon River market, before the large-scale migration to the area, was a steady one, The staples in demand were little different from those which would in time be sold to the Klondike goldseekers. The prospector wanted less ammunition and more hardware, but the contents of provisions outfits were similar. What everyone needed was

flour, sugar, tea, coffee, rice, beans, bacon, rolled oats, evaporated fruits, dehydrated vegetables, lard, macaroni, baking powder, dried salmon, tobacco, evaporated and condensed milk, syrup, matches, kerosene, traps, stores, tents, moccasins, shoe pacs, moosehide mittens, heavy wool socks, underwear, shirts and heavy outer clothing.⁴¹

The stability of the price structure was largely due to the fact that the AC Company's monopoly along the river was complete. Indeed, some of the company's agents did break their semi-partnership with the firm, becoming wholesale customers instead; however, the terms of purchase between these commission merchants and the supply company were similar to earlier ones in that the traders remained relatively independent.⁴² When Harper and Joseph Ladue formed A. Harper and Company, "dealers in Miners' and Prospectors' outfits, traders in fine furs" at Sixty Mile Post,⁴³ there is no evidence that their company competed with its parent firm.

The monopoly was finally cracked in 1892 with the founding of the North American Transportation and Trading Company (the NAT&T Company) by J.J. Healy and Portus B. Weare.⁴⁴ Healy had been an independent trader and packer along the Chilkoot trail when news of the Forty Mile strike reached him in 1887.⁴⁵ Convinced that this was his chance to increase his stakes in Yukon trade and wrest control of the river commerce from the AC Company, he persuaded an American business acquaintance, Portus B. Weare, of the soundness of his grand scheme to extract a fortune from the new strike. Backed by money from the Chicago Cudahy meat firm, Healy and Weare launched their first river steamer, the Portus B. Weare, in 1892.⁴⁶ By the following year their post, wharf, living quarters and storehouse were constructed at Fort Cudahy, across the river from the AC Company's post at Forty Mile.

And so, in 1896, the year of the discovery of gold on what was to become Bonanza Creek, the Yukon River had been successfully opened up from both ends to admit newcomers to the territory, and both of the large trading companies seemed to be in a position to deal with a strike of any size.

With the addition of Dawson storehouses and warehouses to its string, the AC Company had no fewer than 22 working posts along the river.⁴⁷ As important as this was the fact that its traders, in their dealings with the company and with their fellow prospectors, had laid a groundwork of personal and commercial qualities which was essential to gold-rush merchants, both to their operations and to our understanding of them. The trust and brotherliness, the cheerful companionship amid an engulfing isolation, the unquestioning partnership, the honest flexibility of management in times of acute shortage, all were characteristics of the good river trader and points of reference for the Yukon supply trade ever after. Few of these qualities survived the gold-rush and its aftermath wholly intact. The new realities of a highly complex system of supply and distribution called for men of a different temperament. As the story unfolds, the effects of the boom town economy on the character and structure of the river trade will be shown.

Another fundamental part of the Klondike system was the concept of a survival kit or outfit. Both trading companies had become experienced suppliers of such yearly rations, and believed themselves expert at delivering to apparently forsaken depots goods which prospectors were accustomed to at home.⁴⁸ Indeed, many brands were familiar to the northern prospector, but the eating habits which resulted from the outfit and its limitations were unlike anything known to an inhabitant of settled North America.

In 1896, the astonishing discovery of nuggets (as opposed to dust) in the Klondike valley triggered a rush among those miners already in the Yukon valley which was of a magnitude until then unknown. Nevertheless, the rush was clearly confined to those fortunate enough that fall of 1896 to be "inside" (an apt northern term distinguishing the whole area north of the Coastal Range from the rest of North America — that is, "outside"). However, once the Bonanza kings, as the wealthiest of these first Klondikers were known, landed on the docks of San Francisco and Seattle in July 1897, it was obvious that the Yukon goldfields would not stay in the hands of several hundred veteran goldseekers for long. The Klondike shouted out to the whole world. It was also obvious that at that moment neither of the major companies in the north had the wherewithal to outfit the hordes which could be expected to descend on the Yukon valley. Suppliers in cities across the continent were only too glad to make this fact known and to attract part of the Klondike trade to their own shelves and warehouses. "You will need them and you cannot get them up there.... At Lowest Prices and Satisfaction Guaranteed"⁴⁹ was a common invitation to buy one's Klondike outfit locally.

At this point in the story, then, a new breed of Klondike trader demands one's attention. Like the thousands they served, the Klondike outfitters did not necessarily manifest or repudiate the classic qualities of the Alaska and Yukon trader. Honest and shifty, experienced and ignorant were in the business together. For many, the outfitting experience was in itself a mere flash in the pan. For others, the experience of 1897-98 led to a long and fruitful commercial relationship with the Yukon hinterland.