Manufactured Controversy

Emergence of a New Political and Commercial Regime

From the moment the United States agreed to purchase Alaska, merchants of both American coasts prepared to descend on the new frontier to make their fortunes. Some already had toe holds in the new territory like the American Russian Ice Company out of San Francisco who were already doing business with the Russians, hoping that would give them the competitive edge. Others planned to sail into the rich waters of the Bering Sea like the fur seal hunters who had depleted the southern rookeries off Antarctica and Chile. Still others arrived as civil servants like customs collectors and treasury agents. For a time, the military was stationed in the territory to ensure that no seal pelts were taken without having paid customs duty.

The indigenous peoples of Alaska played no part in setting up the new political and commercial regime now dominating their waters, lands and even their own movements. The Unangan, or Aleuts, the people of the Aleutians who had been brought to the Pribylov Islands as slaves by the Russians, were considered little better than savages by many of the well-meaning U.S. government agents and employees dispatched to St. Paul and St. George in the Pribylov Islands.

All these groups with their different intentions would clash, form tenuous alliances, break apart and reform in the tumultuous decades following the 1867 Treaty of Cession, particularly on the Pribylov Islands beginning in 1868. The greatest scenes of friction were between the government agents and the San Francisco merchants, with the Aleuts caught in the middle. The government attempted to enforce the customs laws to protect its considerable investment in the territory and the wealth of resources that were vital to provide revenue from the customs fees and sales of such resources. The merchants were unequally divided between the majority who intended to make profits despite the laws (some of whom were not even American but British, Canadian, and Japanese nationals) and those few operating within the boundaries of both the Russian practices instilled in the Unangan and the new US laws. For those Aleuts the effects of these economic discords began badly but ultimately improved dramatically, making the Pribylov people the richest of all Natives in Alaska for several decades.

In the Beginning, A Free-for-All

The autumn of 1867 began as a free-for-all. Knowing they would be disposing of Russian America; the Russians did not renew their contract with the Hudson Bay Company to secure furs. Thinking this would be a ‘gold rush’ opportunity, merchants of all types, from shipbuilders to storekeepers, headed for the Russian capital, New Arkhangelsk, soon to be called Sitka, to buy out the Russians as they left. One witness observed that by October 18, the date set for the transfer of power, there were hundreds of people and ships overrunning the town to buy, trade, or take whatever was there. Expecting the Russians to sell at fire sale prices, the merchants who wanted the supplies, material assets and merchandise on offer were disappointed with the refusal of the individual who was charged with the disposal, Russian Governor Prince Dimitrii Maksutov, to be bargained down.

Brigadier General Lovell Rousseau was appointed by President Johnson as an agent, “on behalf of the United States to receive from the agents of His Majesty the Emperor of all the Russias the territory dominion property dependencies and appurtenances which are coded by His Imperial Majesty to the United States under the treaty concerning the cession of the Russian possessions in North America concluded March 30, 1867.” Rousseau’s orders specifically excluded “private dwellings and warehouses, blacksmiths, joiners, coopers, tanners…ice houses, flour and sawmills, and any small barracks on the islands are subject to the control of their owners and are not to be included in the transfer to the United States.” However, the considerable assets and infrastructure of the Russian American Company were up for sale, including furs and hides worth thousands of dollars and property held at the more than fifty trading stations throughout what was to become the Territory of Alaska.

Prince Maksutov and Hayward Hutchinson

It was not until December that Maksutov found the man to whom he would sell most of the Russian properties not covered in the Treaty of Cession. That man was an East Coast entrepreneur who had come to San Francisco with the government agents who would preside over the transfer in Sitka, one of whom, General Rousseau, was known to him from his business dealings during the American Civil War. Hayward Hutchinson had come from Baltimore to make his fortune as well, but he had a very different strategy. He met and mingled with several financiers and fur traders in San Francisco, Portland and Victoria, BC, putting together a plan to begin a new enterprise in Alaska dealing with the highly lucrative fur trade. When Hutchinson met Prince Maksutov, he simply offered to pay the asking price instead of bargaining. He later said that he “bought everything they had,” for about $350,000. This included the sealing operation on the Pribylov Islands which was to be the crown jewel of Hutchinson’s venture. Organized as Hutchinson, Kohl and Co., he and Maksutov went on to form another sealing enterprise in the Russian Kommandorski Islands, making all those involved with the business very wealthy. It also enraged a few of the rival American capitalists who had anticipated great gains in the Alaska fur trade. They became bitter adversaries.

Hutchinson had been aware of the upcoming cession and having made the acquaintance of Rousseau in Washington, D.C., traveled with the latter by way of Panama to San Francisco. During the voyage, he got to know Abraham Hirsch with whom he discussed the business opportunities that would follow the cession. They decided to join forces and go into business together. Hutchinson arrived in San Francisco with his strategy. There, he met with Louis Sloss and Lewis Gerstle, successful businessmen who were by the late 1860’s, well-known for backing entrepreneurs. He gained their interest and their support with financing and (presumably) letters of credit to support any expenses and purchases made by himself and Hirsch. Determined to learn more about the Russian colonies and the fur trading businesses there, he set out with Sloss for Portland and then to Vancouver, BC, the port of sealers and whalers. He then headed for Sitka, the capital city of the Russians, arriving about six weeks after the formal transfer ceremony there. He made an appointment to speak with Prince Maksutov, who was not only the last governor of Russian-ruled Alaska but also the chief executive of the Russian American Company. There was an urgency in this desire for a meeting as other American merchants were there as well, haggling with the Prince to purchase RAC assets at the possible lowest prices.

The Assets of the Russian American Company

In Hutchinson’s words: “I…went to Sitka with the full intention of buying the interest of the Russian American Company, their buildings, boats, and paraphernalia which were not transferred to the United States. I bought all their goods and chattels at Sitka: a fixed price per yard, per pound, per dozen, etc. according to the catalogue which they had of the goods on hand….I bought everything they had.”  Backed by Sloss and Gerstle as financiers, he paid in US gold dollars, the common currency of the times, in his own name except for one vessel which was purchased in the name of his new company, Hutchinson & Hirsch. Hutchinson spent the next month inventorying his acquisitions and getting them ready to be shipped and liquidated by Sloss in San Francisco. 

Prince Maksutov had prepared several lists of those assets which included warehouses of furs and merchandise, vessels, and other buildings located throughout Russian America at Kodiak, Kenai, Nushagak, Unalaska, St. Michael and numerous other trading posts the company had established.  He determined that the price would be based on the par value of the company stock owned by the Russian shareholders, or $350,000. Thus the constant efforts of the American merchants for lower prices annoyed the Prince. Immediately upon hearing the asking price, Hutchinson accepted the offer, earning the gratitude and even friendship of the Prince who had tired of the speculating merchants who would undercut his price.

In January of 1868, Hutchinson made the acquaintance of shipping magnate William Kohl and Northwest fur trader Leopold Boscowitz, both well-known to Prince Maksutov. It was during this voyage that these men realized that by combining their efforts, they could all profit handsomely. Kohl had extensive knowledge of coastal routes and possessed seaworthy ships; Boscowitz was a seasoned fur trader with knowledge of the region’s fur-bearing animals, as well as the contacts to sell them. Two others with significant skills joined the company: Captain Gustav Niebaum, who had worked for the Prince for many years taking vessels to the various Russian colony ports; and August Wasserman, a fur trading colleague of Kohl’s and wholesaler with European markets. All the elements of a vertically integrated business enterprise were coalescing.

Of Hutchinson and Kohl, Maksutov said, “You have treated me like gentlemen.  You are the only men who have not tried to beat me out and cut my prices.  The men you see here have been here before you, forming combinations by which I won’t get half of what I have been asking, and trying to beat me down.  But there is something they all do not know about, and I am going to tell you how to profit by it.”  Maksutov then explained that sixty to seventy thousand seal skins were being gathered in the company magazines on the Pribylovs and would be shipped by November.  They were not included in the Russian company’s property list and were unknown to Russian or American officials.  Maksutov promised Hutchinson and Kohl the skins at the extremely low price of $1 each.  Even at its birth, the ACC demonstrated the integrity that would continue to be a hallmark of its operations throughout its long history.

The Challenge of the Rogue Sealers

In May 1868, Captain Gustave Niebaum sailed Hutchinson and Maksutov from San Francisco to Alaska so that the Prince could personally ensure the formerly Russian trading post operations were effectively handed off to Hutchinson. They stopped in Kodiak, Unalaska, St. Michael, and finally St. Paul in the Pribylov Islands, the site of the main sealing operation. Hutchinson planned to stay there for the season to oversee the processing and shipping of the raw seal skins. It was a disastrous season that saw over 200,000 seals taken due to the indiscriminate slaughter of seals by rogue sealers who were decimating the herd and plying the local working Aleuts with whisky. Hutchinson’s new operation was thrown into chaos. Although the seal islands had been transferred to the Americans, they had no protection against this. Sealers from other decimated rookeries in the Southern Pacific waters were now heading north to cash in.

Ships flying British and American flags anchored off both islands while their crews slaughtered all the fur seals they found in the nearby waters and rookeries. The Aleuts, confused as to which sealers were actually legitimate, were concerned about the indiscriminate slaughter. The Natives on St. George petitioned the new government with a list of their concerns about the seals, their livelihood, and their fate. Many were also inebriated having been paid by the rogue sealers in whiskey. Crews of these sealers who had sailed up from Chile, Antarctica, and British Columbia, had staked out beaches and fired guns at any who came near ‘their’ seals. Aghast at the chaos, Hutchinson immediately tried to get his new enterprise organized with the help of Maksutov. He also attempted to make peace deals with the other sealers. Several of those ‘deals’ involved sealers from Nantucket and San Francisco whom he either brought into partnership or bought outright to protect the herd from extermination. He garnered a few more aggrieved business competitors but was supported by the US Revenue Cutter Service. Captain James White commanded the USRCS Wayanda on a cruise in the Bering Sea to check out the new territory for the government which knew little of Alaska. White chased off several of the foreign sealing vessels and took an axe to the barrels of whiskey he found at the rookeries. Most importantly, the report he wrote to his commanders resulted in Congress calling a halt to all sealing on the islands to save the remains of the seal herd.

Hutchinson employed his persuasive skills with several of the rogue sealers. One company was Williams, Haven Company out of New London, Connecticut, which agreed to divide up the rookeries as well as to run off other sealers who would compete with them. The other sealing operation, backed by San Francisco banker John Parrot, had been on St. George Island and eventually joined forces with Hutchinson for a share of the profits. Leaving the Pribylovs, Hutchinson was convinced that if one exclusive monopoly to operate the sealing effort on the seal islands was not granted, the competition amongst the sealers would wipe out not only the seal herd but the livelihood of the Natives as well as the future profits for his company. This situation led to the formation of the Alaska Commercial Company, which was chartered as a corporation on September 18, 1868, just a month shy of the anniversary of the Treaty of Cession. So impressed was Maksutov by Hutchinson’s good nature and business acumen, he decided to offer the businessman even more: a sealing operation on the Pribylov Islands and later a similar sealing operation in the Russian Far East Kommandorski Islands. This decision immediately broadened the scope of Hutchinson’s fur trading strategy to include the exclusive right to the sealing operations. This would ensure control of the seal pelt business worldwide.

Still the situation had deteriorated all the way around: Hutchinson’s investment was endangered by the mass slaughter and theft of valuable seal skins; the U.S. government received no revenue on the stolen furs; the situation became an international squabble when the U.S. accused the British and Canadians of poaching in what was now U.S. waters; and the Unangan were left high and dry with no way of making a living on the islands they had come to call home. Additionally, the ire of the sealers, the so-called traders, and their financiers who had sunk considerable capital in the various schemes was exacerbated when the U.S. government closed the rookeries, declaring them a federal reserve. These merchants felt they had a right to profits even if it meant hunting the means of that profit to extinction and leaving the Native people without means.

The ACC and the Pribylov Islands Fur Seal Operation

This anger erupted into outright hostility and a barrage of manufactured controversies when in 1870 Congress took further action on Captain White’s report by setting up an industrial monopoly of the fur seal operation in the Seal Islands and awarded the contract to the Alaska Commercial Company (ACC). Composed of Hutchinson, Kohl & Company, plus a few of the American sealers, a former employee of the Russian American Company, and some experienced fur brokers, their combined talents created the perfect fur seal company in 1868. One of the stipulations was that only 100,000 seals would be harvested each year to preserve the herd. This arrangement also benefitted the Aleuts who, according to the contract between the government and ACC, would receive free housing, education, transportation, medical services, food, fuel, and be paid in US gold dollars for their labor harvesting and packing the fur seal skins. The 20-year agreement satisfied all but the disgruntled businessmen who didn’t get a piece of the action.

They formed the Anti-Monopoly League of the Pacific Coast in San Francisco, recruiting the former members of the American Russian Company, numerous other fur traders and dealers and their backers from Victoria, B.C., the Oregon and Washington Territories, and California. These men unleashed their disappointment and anger in a tract called The Wrongs of Alaska published in 1875. Their collective dismay focused on the lessee of the Seal Islands monopoly, the ACC, blaming it for all that the would-be Alaskan merchants felt they’d been deprived of. The accusations were many, including:

“Crushing all other enterprise in the whole Territory (of Alaska)”
“Stalling discovery and development”
“Killing all trade with Alaska on the whole Pacific Coast”
“Concealing the true value of the Alaska Territory”

Alaska Commercial Company Russo-America Primer Forward, 1871.
Alaska Commercial Company Russo-America Primer Forward, 1871.
Accusations, Challenges and Retractions

But the most egregious was the accusation that the Alaska Commercial Company treated the Unangan as virtual slaves, holding them in ‘serfdom’. Another object of their wrath was Henry W. Elliott, author of The Seal Islands of Alaska, who encouraged the preservation of the fur seal herd. However, the baseless claim that the government engaged in corruption violating the constitution by awarding the lease of the Seal Islands to the ACC, caused Congress to investigate the matter in 1876. The House Committee of Ways & Means conducted a four-month-long investigation, calling witnesses, examining documents, questioning government officials, and taking testimony regarding the claims made by the League.

The furor was, in part, initiated by a willful ignoring of the letter of the laws that Congress had passed to protect the seal herd among them the provisos that only young males were to be harvested and only on the islands and only by the Natives skilled in the trade. This was to be done under the auspices of the Department of the Treasury. Other than the revenue cutters or the ACC vessels, no ships were authorized to touch upon the islands or engage in sealing in the Bering Sea. The welfare of the employed Natives was the responsibility of the ACC in providing services as listed above, operating a mercantile store for their benefit, and maintaining an inventory and shipping the skins. The Aleuts, as with all Native Alaskans were not considered citizens, but wards of the US government; this carried its own set of regulations unrelated to the ACC lease.

The merchants interpreted the restrictions in the laws as hindrances instigated by the ACC instead of rules of the Department of the Treasury Department. From this misreading, they postulated outlandish claims that ACC controlled all of Alaska and kept everyone else at bay for their own financial purposes.  

Following this investigation and thorough review of the actions of the Secretary of the Treasury and other officials, the committee issued House Report #623 fully exonerating both the agency and ACC of the charges of ‘fraud or corruption’ writing in their conclusion note that the fur seal industry of the Pribilof Islands was ‘in competent and honest hands’ and ‘complying with the terms and conditions of their lease’. The committee further noted that the complainants (the Anti-Monopoly League) did not present any evidence to support their claims. Robert Desty, the poison pen writer of the Wrongs of Alaska admitted to the House Ways & Means Committee that all the charges, given to him by rival bidders for the Seal Islands monopoly, were in fact, fictitious.

However, the reputation of the Alaska Commercial Company was tarnished by these defamations invented by Louis Goldstone and his League. One person who took their complaints seriously, and without verification, was the Governor of Alaska Alfred P. Swineford. Swineford governed from Sitka and never ventured to the Westward of Alaska. All his negative complaints about ACC were fed to him by League members. In his Annual Report for 1887, Swineford repeated many of the fraudulent claims earlier dismissed by Congress. He conducted no enquiry or investigation of any of the by now numerous government officials stationed in Alaska nor did he contact any ACC employee or board member. Once again, the company was accused of securing ‘ill-gotten gains…wrung from a hapless and helpless people;” and of possessing “…the greater part of the mainland as a principality of its own, over which it exercises undisputed sway.”  

House Report 623: Investigation into the fur seal lease between the Alaska Commercial Company and the US Government

by The House Committee on Ways and Means, to whom was referred the resolution of the House of Representatives, directing an investigation into certain matters relating to the lease made between the United States and the Alaska Commercial Company, of the right to kill fur seals on the islands of Saint George and Saint Paul, in Alaska.

Click on the images below to see passages from testimonies included in the June 3, 1876, report.


Mr. Boutwell, Secretary of the Treasury

p. 8

Protection of U.S. interests

p. 10

Mr. Bristow, Secretary of the Treasury

pp 29-35

John Miller, President of the Board of Directors, ACC

pp. 78-84

Henry W. Elliott, American watercolorist, author, and environmentalist whose work primarily focused on Alaskan subjects. He was sent by the Smithsonian to accompany a U.S. Treasury agent to the Pribylovs to study the life and habits of the seals.

pp. 95-101

Charles Bryant, U.S. Gov’t Treasury Agent, Pribylov Islands

pp 139-143

Robert Desty, San Francisco journalist for the Alaska Herald

Governor Swineford Recants

The Alaska Commercial Company, which had been operating fur trading stations in Western Alaska and maintaining its lease on the Pribylov Islands for 17 years, was interested in pursuing another lease. They did not let Swineford’s incorrect report go unchallenged and issued a detailed referenced response: Reply of the Alaska Commercial Company to the Charges of Governor Alfred P. Swineford, of Alaska Against the Company in His Annual Report for the Year 1887. Included in this rejoinder were numerous letters attesting to the generous nature of ACC toward not only Natives but toward the general population in need wherever they did business. These testimonials came from ship captains, church bishops, prospectors, government agents, and others who had intimate knowledge of company operations. Swineford later retracted his statements following a visit to the Pribylov Islands and complimented the company on their operations and concern for the welfare of the Natives who lived and worked there.

However, the award for the second 20-year bid went not to ACC, but to a new company, the North American Commercial Company made up of former League members and led by Isaac Liebes, the financier of notorious Canadian pelagic seal hunter Alex Maclean. The new lease carried a higher annual rent and more than tripled the tax on each pelt while cutting the harvest down to 60,000 skins. While the ACC had taken it upon themselves to provide many benefits to the Unanagan - on the advice of Hutchinson who had witnessed firsthand the debacle of 1868 - the government now added them as conditions of the 1890 lease including providing medical and educational services, building and maintenance for the church and workers’ homes, and providing coal. The second lease ultimately did not provide as much revenue for either the NACC or the government due to the severe decline of the seal herd. While the ACC did not generate as much revenue for its shareholders in the next ten years, it established itself solidly, moving on to new Alaskan ventures.  



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