Crime syndicate and the Keystone Canyon affair
Aunt Phil's Trunk
September 1, 2021 | View PDF
Prospectors searching for gold in the Wrangell mountains during the early 1900s found a mountain of copper instead. That discovery brought the famous Guggenheim-Morgan Syndicate into the history of Alaska, along with chicanery of the highest order.
The Syndicate, which owned the copper mines, needed a transportation system to haul its lucrative cargo. It planned a railroad line in the Copper River valley that ran 196 miles from Cordova to the site of what became the Kennecott Copper mines. The Guggenheims also hoped to use their railroad to exploit large coal fields near Cordova and to ship the coal to West Coast markets.
But other railroads also were being built, and often the railroad gangs clashed. Such was the case in fall 1907. A rival crew working on a railroad from Valdez were confronted by a rock barricade erected by the Guggenheims when they entered the Keystone Canyon, leading to Thompson Pass.
Armed with tools, the Valdez railroad men marched toward the Syndicate's obstruction on Sept. 25. They were met with gunfire backed by badges.
Local Syndicate officials had convinced the U.S. Marshal in Fairbanks to issue temporary deputy marshal commissions to Syndicate employees, including a man named Edward C. Hasey. Sheltered behind the barricade, Hasey shot three marchers, killing one.
A grand jury was hastily convened. And even though Territorial Gov. Wilford B . Hoggatt, a well-known Syndicate supporter, hurried to Valdez to intervene on Hasey's behalf, the gunman was indicted for murder. His trial then was moved to Juneau, since ill sentiments against the Syndicate abounded in Valdez.
Prior to the trial, however, Gov. Hoggatt was successful in convincing the Justice Department to remove the U.S. Attorney who'd refused to allow Hoggatt to interfere with the Valdez Grand Jury proceedings.
Then the Guggenheims put one of the Valdez railroad workmen on its payroll and prepared him to testify in Hasey's trial to say that the Valdez workers were armed when they marched on the barricade in Keystone Canyon.
After several weeks of testimony in spring 1908, the jurors found that Hasey's fear of bodily harm by the Valdez railroad crew justified his shooting in self defense. They acquitted him of the murder charge. But in February 1909, Hasey was found guilty on a second charge of assault. He served 18 months at McNeil Island, receiving full pay and benefits for his family during his incarceration.
Perhaps blinded by its success at paying off a witness in the Keystone Canyon murder trial and getting the U.S. Attorney removed from the Territory, Syndicate officials next persuaded their workers to line up against Judge James Wickersham during his campaign for the office of Territorial Delegate to Congress.
Big mistake. That decision caused Wickersham to come down hard on the Syndicate.
The judge got evidence from a former Syndicate bookkeeper that showed how a Valdez railroad worker, who was the key witness in the first Hasey trial, had carried Guggenheim money to other witnesses for the prosecution, as well as members of the trial jury.
Persuading President Taft to oust U.S. Marshal Dan Sutherland of Juneau, as well as the U.S. Attorney, also backfired against the Guggenheims when a Senate committee convened to consider the fitness of new appointees. Wickersham argued that the real reason behind the dismissals was because the marshal and attorney were investigating the Hasey affair.
While the Senate confirmed the new officers, John Rutgard and Herbert Faulkner, the attorney general decided to reopen an investigation into the Keystone Canyon trials and other questionable activities of the Syndicate in Alaska.
As a result, subsequent digging into Syndicate activities found collusive bidding on contracts for coal for the U.S. Army posts in the Territory, as well as 37 fraudulent claims under the title of Clarence Cunningham and associates. Federal officials determined that the claims had been taken out with intent to consolidate and create a monopoly in the interests of the Guggenheim-Morgan Syndicate, which needed the coal for its Copper River Railroad.
That discovery brought about the prosecution of several Syndicate officials and a locking up of coal resources in Alaska.
Gifford Pinchot, first director of the U.S. Forest Service and close friend of Theodore Roosevelt, ordered the withdrawal of vast coal field holdings in Alaska to protect them from the Guggenheim Syndicate. The early conservationist's action was one reason for his later dismissal by President Taft, which precipitated the historic split between the Taft and Roosevelt branches in the Republican Party during the 1912 presidential election that saw Woodrow Wilson and the Democrats triumph.
And so it was that the shooting of a Valdez railroad worker on a barricaded track in Keystone Canyon, which resulted in payoffs, perjury and manipulation by the Guggenheim-Morgan Syndicate, ended the Syndicate's attempt to control coal resources in Alaska. The company that wanted to dominate the Territory never did secure its coal lands.
This column features tidbits found among the writings of the late Alaska historian, Phyllis Downing Carlson. Her niece, Laurel Downing Bill, has turned many of Carlson's stories – as well as stories from her own research – into a series of books titled "Aunt Phil's Trunk." Volumes One through Five are available at bookstores and gift shops throughout Alaska, as well as online at http://www.auntphilstrunk.com and Amazon.com.