The Northwest Trading Company

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Paul Schulze. Henry Villard. Those names are usually associated with the railroad tycoons and their sometimes shady financing schemes, not Southeast Alaska. However, these gentlemen had much to do with the founding of Juneau and the European development of Southeast Alaska in general following Seward's purchase in 1867. Schulze was a Portland, Oregon railroad man who apparently fared well during the wildly speculative railroad building of the American west during the 1870's. He was involved in the Oregon Railway and Navigation Company, an outgrowth of the most powerful transportation monopoly in the Pacific Northwest, the Oregon Steam Navigation Company. Eventually the Oregon rail network joined up with Northern Pacific Railroad, driving their golden spike at Gold Creek, Montana on September 8, 1883 to form the first northern link from the midwest (Minneapolis) to the Pacific Coast shipping routes, initially terminating at Portland, Oregon. Schulze appears to have rounded up some fellow railroad investors, including Henry Villard, to finance his new "Northwest Trading Company", not related to the former Canadian fur trading of the same name. The source of Schulze's initial interest in Alaska remains a mystery. Schulze may have had an interest in indiginous artifacts of the region. We do know that early on in the venture (1881), he had two Germans (Aurel and Arthur Krause) from the Bremen Geographical Society, collecting artifacts from his Northwest Trading Company vessel and trading posts (Cole 1995).

The Northwest Trading Company presents itself as an ambitious firm, organized in Portland, Oregon, which sought to establish a foothold in the newly purchased (1867) and rapidly developing Alaska Territory. Mohr (1979) relates how the Alaska Commercial Company (initially named Hutchinson, Kohl and Company of San Francisco), had secured a near-monopoly on Alaska commercial and trading ventures, with a specific interest in the fur trade (primarily sea otters) developed by the Russian America Company.

The Northwest Trading Company appears to have been focused on a more diverse array of commercial interests, in addition to the fur trade, as it sought to make inroads on the lucrative development of Alaska. Out in the Aleutians, the Northwest Trading Company did go after the sea otter fur trade in Unalaska (Mohr 1978), which previously had belonged almost exclusively to the Alaska Commercial Company. The steamer Favorite was purchased and in 1880 set out for Southeast Alaska under the command of J.W. Keene to support operations there. By the spring of 1881, the new company had established trading posts at Howkan, Killisnoo, Sitka, and Juneau. When not engaged in company support operations, the Favorite was let out for charter to the U.S. Navy, which governed Alaska at the time.

The operation was clearly well financed, constructing shore plants, purchasing vessels and barges, and moving men and equipment around Southeast Alaska with ease, very quickly after the start of its operations. The establishment of the Juneau base, as related by De Armond (1967) illustrates the company's opportunistic methodology. While the Favorite was in Sitka in the late fall of 1880, news of Richard Harris and Joe Juneau's gold strike arrived. The Favorite quickly set out for Juneau, already carrying supplies and a knocked-down frame house (Juneau's first), in addition to the first wave of miners. In those first few days of December 1880, almost everyone present was swept up in the frenzy of staking gold mining claims, including the officers of an attending naval ship. However, after discharging his cargo of eager miners, Captain Vanderbilt of the Favorite instead traveled away from the gold strike to north Douglas Island, to stake three claims for homesteads, one for himself, and one each for the U.S. collector of customs and his deputy at Sitka. These actions speak to Vanderbilt having more of a keen eye for business relationships than for the speculative action on the gold fields. Deep snow was to put a damper on further claim staking that winter, but by March of 1881, Capt. Vanderbilt re-appeared in Juneau with the Favorite, towing a barge to be used as a mobile mercantile, Juneau's first store, already stocked and ready for business.

Killisnoo Operations

With opportunistic minds like Capt. Vanderbilt guiding the operations, the sight of whales preying on herring nearby could quickly lead to the development of a shore-based whaling station at Killisnoo, as the U.S. Census Report for 1890 (U.S. Dept. of Interior 1893) records the establishment of the Killisnoo plant:

The enterprise was begun in an experimental way in 1879 by the Northwest Trading Company. The company had established a trading station at Killisnoo in 1878. It was observed that a large number of finback whales frequented the waters of that vicinity to feed on the herring and in 1880 whaling was attempted but was discontinued the same year. The oil and fertilizer business having been found a profitable one it was gradually increased until in 1887 the maximum production of 380,000 gallons of oil was reached.

Although this report provides insight into the reason for establishing the whaling operation, other records document whaling continuing through at least 1882. In fact the bombardment of Angoon in October 1882, involved a harpoon exploding while engaged whaling. (note: Petroff [1884] makes no mention of Killisnoo operations in the "Fisheries" section of the 1880 census.)

Eliza Ruhamah Scidmore provides one of the few observations of the switch from whaling to processing herring, as well as of the initial investments in the plant. Scidmore was a pioneering travel writer (and later a National Geographic board member) travelling through Southeast Alaska in 1883 (on the propeller steamer Idaho) and again in 1884 (on the sidewheeler Ancon). On at least one of the voyages (both voyages are combined in her writings) these Pacific Coast Steamship coastal steamers called at Angoon and Killisnoo. Her written (Scidmore 1885) account of these voyages appears to be the first "tourist guide" to Southeast Alaska, and paints a descriptive snapshot view of Killisnoo at the moment of her visit(s):

On this little island of Kenasnow, the Northwest Trading Company has its largest station, Killisnoo, where codfish are dried, herring and dogfish converted into oil, and the air weighted with the most horrible smells from the fish guano manufactured there. The company has extensive warehouses, works, and shops on Kenasnow, and around the buildings there are gathered quite a village of Kootznahoo Indians who are employed at the fishery. This station represents an investment of over $100,000; the oil works alone having cost $70,000, and extravagant management having doubled all the necessary expenses of the first plant. As there was no water supply on the solid rock of Kenasnow, a reservoir with a storage capacity of 90,000 gallons of water was constructed; and with cedar forests on every side every bit of lumber used was brought by freight from below.
Killisnoo was first established as a whaling station but many causes decided the company to abandon that branch of fishery. There is a tradition that the Indians once regarded their great totemic beast, the whale, with such veneration that they would never kill it, nor eat of its flesh and blubber. The Kootznahoos have grown skeptical in many ways, and they made no objections to harpooning the whale, until the bomb exploded in 1882; and after the troubles following upon that impious adventure, the company decided that whaling was not a profitable business, and began to fish for cod and smaller fry.

Other Operations

The Northwest Trading Company opened a post at Chilkoot in 1880, although the local Tlingit prevented them from trading directly with the interior peoples (Betts 1994).

In 1880, the Northwest trading Company built a store in Hoonah that was then bought by the Clark family in 1893. (Hoonah Coastal Management Plan 2005).

The Pyramid Harbor cannery on the western side of the Chilkat Inlet was built in 1883 by the Northwest Trading Company. This cannery burned in 1889, but was rebuilt at once and a pack was made that year (source: http://sheldonmuseum.org/subsistencefishing.htm

About the new company, the New York Times observed in October 1884

The Northwest Trading Company of Portland was organized some three years ago with a small capital. It has lately increased its stock, and has six stations in this part of the Territory. They do a general trading business, and the Indians exchange their furs for civilized goods at these stores. At Pyramid Harbor the company has a salmon cannery in addition to its stores, and at Killisnoo a large factory for making herring oil and drying codfish. Killisnoo was first established as a whale fishery, but that industry was abandoned when it was found that herring was the more profitable fish. The oil works are managed by men who have had charge of menhaden fisheries in the East, and last year 83,000 gallons were shipped below as the result of the first season's work. The herring season is from the end of August to January, and during the Summer the fine delicate cod of this coast is dried and packed at the rate of 2,000 and 3,000 cases a season. --(IN A NEGLECTED COUNTRY; THE INDUSTRIES AND NATURAL WEALTH OF ALASKA. THEIR DEVELOPMENT JUST BEGUN, AS THERE HAS BEEN NO GOVERNMENT-- THE NATIVES A HARD-WORKING RACE. NY Times October 5, 1884, Wednesday, appears to be written by Eliza Ruhamah Scidmore)

End of the Company

Financial hard times beset Schulze and his railroad men in the mid-1880s. Their railroad operations were always topsy-turvy, there was a mild recession going on (including Grant's panic of 1884), and their Northwest Trading Company may have expanded too rapidly, particularly stretched at the Pyramid Harbor cannery (De Armond 1990). The company went into the hands of trustees in 1888 (Moser 1899). In September 1885, a bitter Edward de Groff (1885), a manager at Killisnoo, writes of a recent communication with Schulze:

Schulze fairly cursed the country this time when the Steamer came up. Said he had lost his own and his Friends money in it. I wonder if any of those egotistical chaps ever think that a great many of their misfortunes are their own fault - they are careful not to tell anyone if they do.

The Killisnoo plant must have been a successful enterprise however, because its assets were purchased by the newly formed Alaska Oil and Guano Company, which retained the Favorite and continued to operate for many years. The Sitka store was sold to Vanderbilt and de Grof, and the Juneau store to former employees Karl Koehler and Edmund H. James (De Armond 1990).

Epitaph for Mr. Schulze

The flaky finances and ensuing bankruptcy of Schulze and Villard's Northern Pacific Railroad was one of the underlying causes propelling the famous Panic of 1893 to the status of the worst depression the United States had ever seen. In the wake of the bankruptcy, numerous shady dealings of Schulze's, which the New York Times termed no less than A Land Agents Theft, came to light. With personal debts thought to approach one-half million dollars, an exorbitant figure for the 19th century, Paul Schulze commited suicide in 1895.