12/22/03

Starting a railroad. Valdez subscribes for stock. Financing a Trans-Alaskan line. Asking Congress for a subsidy. The wild goose chase to Butte. Broke on the Pennsylvania Limited.

After seeing with my own eyes the enormous deposits of copper in interior Alaska, it was simply impossible for me not to make an attempt to open up the country so that such resources could be developed. In surveying the situation, it was clear to me that Valdez was the natural gateway to the interior of Alaska, being many miles shorter than any other route and the only town of consequence on Prince William Sound. Therefore, I decided to make Valdez the terminus of a railroad to the Yukon River – a trunk line that could throw out its branches on both dies and draw business from every point in Alaska.

I conceived the idea that I was the man to build such a road, and shortly after my return from the expedition to the White River and my convalescence from my broken leg, I lost no time in starting the enterprise. George Baldwin, a prominent railroad engineer, was selected to survey the line through to Eagle, on the Yukon River, and a company was organized to have a capital of $25,000,000, with dummy officers, who contracted with me to build the road. I was to receive $250,000 for each miles built, in stock, and 30,000 a mile in 6% bonds. The details of organization completed, I applied to the Secretary of the Interior for a franchise and right-of-way through Keystone canyon on the Lowe River, which I obtained, and the town of Valdez granted me a right-of-way through the streets. I already owned the wharf, the income from which would pay the interest on the bonds for the first ten miles. I bought ten thousand ties at fourteen cents each, and built a railroad trestle paralleling the dock, following that with eight miles of grading.

Having started and paid for this work with my own personal funds, it dawned upon me that I could not build the road myself, and would have to get outside money. With this in view I called a mass meeting, and that evening the town hall was filled with the citizens of Valdez. I laid my plans before them, offering the railroad stock at par, payable in quarterly installments on the completion of each five miles of road. This proposition took like wildfire, and before the meeting broke up they had subscribed for 276,000 shares. Still, I was getting no cash to pay for five miles of rail and some rolling stock, a matter of $14,000. Now, $14,000 was not much money to put into the construction of a railroad, but it would have completed the five miles, after which twenty-five per cent of the stock subscription would be due. On the whole, the proposition was sound. It was the first railroad in western Alaska, and no other project of the kind had been mentioned.

While all this furor about a railroad from Valdez was going on, the town started to boom. Houses began to go up on all sides, and at once there was an occupant for every vacant lot in the town. The steamers were coming in crowded with passengers and heavy with cargoes. Inside the range there was the Bonanza mine with trainloads of high-grade ore waiting for transportation, with freight, passengers, and mail all along the line, offering a business for the road that would pay for it in five years.

I determined to try Seattle for the money I needed. There, though it is possible that many wealthy men would have been glad to give me the funds if they could have been reached. I could get in touch with none of them. In Seattle I put my plan before the Chamber of Commerce, which appointed a special committee, and these gentlemen obtained additional subscriptions for 700,000 shares, but not a dollar in money, although Seattle was the greatest beneficiary of the Alaskan trade. The same thing happened in Portland: plenty of stock subscriptions but no $14,000! From Portland I continued my pilgrimage to Whatoon and then to Bellingham, but the best the latter would do was to offer me free wharfage for my steamer. One shipbroker offered me three steamers, then in the Eastern fruit trade, in return for my bonds, but I had no money to take them over and bring them around the Horn, so the deal fell through.

During the time when I was commuting between Alaska and the States, my wife stayed in Seattle, as she was not well. During my railroad affairs she was taken dangerously ill from anemic poison, and I dropped everything to attend to her. As soon as the physician permitted, I secured a drawing room on the Burlington and removed her to Washington D.C. there some doctors took her in charge, declared her trouble to be cancer of the liver, and carried her to Dr. fry’s hospital on Connecticut Avenue for an operation. As soon as she could be removed, I brought her home, and with careful nursing she recovered, much to the astonishment of her physicians.

In New York I resumed my railroad activities, and put my proposition up to Mr. Willard P. ward, Dan Guggenheim, and Sam Untermeyer. These gentlemen were very dubious concerning the feasibility of building a railroad in Alaska. They said I was years ahead of time, and that it was impossible at that time to buy railroad iron. I told them I had an option on the steel at Vancouver, and if they would give me the money, I would show them. With such powerful men as these refusing to come in, what chance had I with smaller fry?

In Washington I had a bill introduced in both houses asking for a subsidy of $5000 a mile, for which I agreed to carry the army and munitions in case of war and the mail free in time of peace. For a time the bill had a favorable reception, but the knockers heard of it, and one man, who would have been largely benefited if the road had been built, appeared before the Senate committee and declared that I had no financial backing. Senator nelson of Minnesota, who I knew was a great friend of Alaska, talked with me in the Marble Room of the Senate, and said: “Tell me who your backers are, Mr. Iles, and if they are satisfactory we will put this measure through for you!”  I replied, “Senator, I have no backers except the subscribers to more than a million shares of stock. If the Government gives me this subsidy, I shall need no backers.” The news of my application for a subsidy soon brought opposition from various promoters, who were preparing, on paper, railroads for Alaska, with the result that my bills went into that bourne form which there is no return.

The closest I ever came to financing my road and putting it through as originally planned was when a telegram was handed to me in Washington from James Murray, president of the Miners & Merchants Bank of Butte, Montana, which read:

“Alfred B. Iles

Washington, D.C.

            “Will take two hundred fifty thousand bonds Valdez & Northern provided I am president of the road. Come to Butte and close deal.

                                                                        James Murray.”

I promptly wired back:

            James Murray

            Butte, Montana

                        “Conditions accepted. Send guarantee for trip.

                                                                        Alfred B. Iles.”

To which I received the following reply:

            “Alfred B. Iles

            Washington D.C.

                        “You don’t need any guarantee. Come on and get the money.

                                                                        James Murray.”

With those telegrams I boarded the Pennsylvania Limited at the old Sixth Street Station in Washington the next morning. The car was empty and I took the first chair in the aisle. The next passenger was a lady, who took a seat about the middle of the car. A newsagent next appeared on the scene and the lady bought a magazine, handing him a ten-dollar bill, and turn to me for change. In my pocket was a folder used for letters of credits, etc., and in it was $192.00 in bills, cards, and my railroad ticket from Chicago to Seattle. In my vest pocket were my railroad and sleeper tickets from Washington to Chicago and some silver. I took the folder from my inside coat pocket, gave the boy two fives, and returned the flap to its place. That was the last I saw of it.

The car filled up, and the conductor changed my seat. I had a buffet lunch on my way to Harrisburg and paid for it from the silver in my vest pocket. On the main line platform I sent a telegram to a friend in Seattle and also paid that from my silver, Dinner in the dining car cost me $2,40, and I reached for my pocket book. It was gone! I was on the Pennsylvania Limited going to Butte, with the capital of about ten cents! I called the conductor of the diner and told him of my loss, and asked him if he would take a check for my dinner, to which he agreed, and accepted a draft on the Boston National Bank of Seattle.

We arrived late in Chicago, and the Pioneer Limited was waiting to pull out. I rushed up to the Chicago, Milwaukee & St. Paul office and there met Mr. Southy, the passenger agent. I told him of my loss, showing him my telegram, etc., and asked if he would take a check for a ticket to St. Paul. He said: “Certainly! And I am something of a sport myself. Take this – you will need it to eat on!” handing me a five dollar bill. He then stepped to the telephone and held the Pioneer Limited until I could get on to the train. The Milwaukee road had never lost anything through that kindly act.

At Milwaukee I telegraphed my Seattle bank to have money for me at St. Paul on my arrival. When we pulled into the station I hurried to the Western Union Office. “Have you any money for me?” I inquired, giving my credentials. “Yes,” the operator replied, “but you can’t get it tonight. The cashier has gone home, and we haven’t the combination of the safe.” I said it was of the utmost importance that I got the money at once, but it resulted in nothing, so I went to a hotel to wait for the next day’s train. In the morning I reported the loss of my ticket at the Northern Pacific offices, and a year afterward received a check for the amount. The lost ticket was never presented.

I had a presentiment that the delay meant no good to me. When the train stopped at Butte and I saw Jim Murray on the platform with a telegram in his hand, I knew that my fears were well grounded. After a perfunctory greeting, Murray said that the deal was off, as his partner had decided to go into a streetcar line in Los Angeles. Without further words I stepped on the train again and went on to Seattle.