Financial History Issue 132 (Winter 2020) | Page 32

more provisions. He settled his account
with Ladue using some of the gold he’d
found.
Ladue was impressed by Henderson’s
persistence as well as his gold. Ladue
advised Henderson to retrace his steps
to the Klondike River rather than via
the Indian River, and Henderson took
his advice. At the mouth of the Klon-
dike, Henderson met George Carmack,
an American fishing and living with the
native Tagish Indians. He told Carmack
of his find and suggested he try panning
the other small creeks that flow into the
Klondike, but shortly afterwards Hender-
son hurt his leg badly and had to leave the
area. Carmack and his fishing partners
—a strapping Tagish man and Carmack’s
brother-in-law “Skookum” Jim Mason
(Skookum is the native word for strong)
and Mason’s nephew Charlie—tried pan-
ning in nearby Rabbit Creek, and there
they discovered copious gold flakes in the
placer deposits in the stream.
Rabbit Creek was a remote spot, but
of the few human beings living within 50
miles, many were potential prospectors.
Word traveled fast. One member of the
Royal Canadian Mounted Police heard
about the gold strike and left his post in
late August to try his luck, but on reach-
ing Rabbit Creek on September 1 he dis-
covered that both sides of the creek were
completely staked out. The Alaska Gold
Rush was on.
The rest of the world would remain in
the dark as to the magnitude of the gold
strike along the Klondike for quite a while.
Carmack wrote his sister in California of
his good fortune late in 1896, but she did
little with the information. Three grizzled
prospectors found their way to Seattle in
November 1896 and reported that gold
had been found, but such reports were
common, and Alaska was already known
to contain gold. Winter settled over the
Yukon, and the freezing of the rivers
would isolate those Klondike prospectors
from the rest of the world.
Bryan lost the election to William
McKinley that November. Critical agri-
cultural states in the Midwest remained
suspicious of Bryan’s “new and radical
policy” and voted Republican. Bryan did
well enough, though. His newly cast Dem-
ocratic party could legitimately hope to
grow its base of voters. After all, there
were many persuadable “silver men”
among Republican voters.
The spring thaw of 1897 would change
that political landscape. It set in motion
the fruits of nearly a year’s worth of gold
sluicing and panning: down the Klondike
and Yukon Rivers, into the Bering Sea
and south to the nation’s banks. On July
16, $400,000 of Klondike gold (worth $30
million today) arrived in San Francisco.
Two days later, over a ton of the mes-
merizing metal worth $700,000 reached
Seattle along with its newly rich owners.
Papers throughout the country shouted
the news. A stampede to the Klondike
began.
Over $400 million of gold flowed into
the nation’s banking system from 1897
to 1900 (some of it from South Africa
and Australia). The economy boomed
and grain prices increased. This gold-
fueled economic growth dimmed Bryan’s
once incandescent political future. He was
nominated again in 1900, but he lost
even more soundly to McKinley. He was
put forward yet again by the Democrats
in 1908 with the economy mired in a
slump, just as in 1896. The 1908 slump
was blamed on a New York banking crisis
rather than the gold standard, and Bryan
lost to William Howard Taft.
The prosperity that rained down on
Carmack, Mason and “Dawson” Charlie
was hard for them to control. Carmack
abandoned his Yukon-born wife and
moved to California and then Seattle. Rich
but restless, he spent his last years working
claims in the Sierra Nevada range and the
Cascades, hoping to re-live the excitement
of Rabbit Creek. Mason and his nephew
moved to Seattle; ensconced in nice quar-
ters they went through money like water,
at one point reportedly causing a commo-
tion in the street below by throwing bills
out a hotel window. They grew bored with
city life after a few years and moved back
to the Yukon, where Charlie died falling
from a railroad bridge in 1908. A series of
bad investments revived a prudent streak
in “Skookum” Jim Mason, and he set up a
trust with the money he had left. He lived
out his remaining years in the peace and
quiet of the Yukon.
Carmack, Mason and Charlie’s gold
strike may have dimmed Bryan’s political
light, but Bryan’s ideas—when marketed
differently—would later carry the day.
Gold production remained healthy
for 20 years following the Alaska gold
strike, but then declined throughout the
1920s. Farm prices softened, and when the
30    FINANCIAL HISTORY  |  Winter 2020  | www.MoAF.org
economy and prices collapsed in the early
1930s, the nation’s politicians were again
confronted with a crisis.
Democrats had learned their lesson. It
was clearly unwise to advocate devaluing
the dollar to increase prices, but was it
necessarily unwise to simply devalue? The
Franklin D. Roosevelt campaign of 1932
was staunchly anti-inflationary—their
platform advocated “a sound currency
to be preserved at all hazards”—but on
assuming office, Roosevelt devalued the
dollar to $35/troy ounce from $20.67 and
prevented creditors from demanding re-
payment in gold. Prices increased, and
Roosevelt’s popularity did not decline.
Roosevelt legalized Federal Reserve “open
market operations,” paving the way for
today’s gold-free, “inflation targeting”
(i.e., gradual devaluation) system.
The political box score: No wins and
three losses when campaigning for dollar
devaluation (i.e., the Bryan record), four
wins and no losses when campaigning
for a sound currency and putting in place
devaluation measures (the FDR record).
Roosevelt learned from Bryan’s defeats,
and the lessons he taught the nation’s
politicians—Democrats and Republicans
—guide them to this day. 
Daniel C. Munson enjoys financial and
scientific history. His writings have
appeared in Barron’s, Financial History
and many other publications.
Sources
Bennett, Gordon. Skookum Jim Biography.
Yukon Territorial Archives. 1980.
Kazin, Michael. A Godly Hero: The Life of
William Jennings Bryan. New York: Knopf.
2006.
National Democratic Party Platforms: 1932,
1936 and 1940.
Paludan, Philip S. A People’s Contest: The
Union and Civil War, 1861-1865. Kansas:
Harper & Row. 1988.
Rove, Karl. The Triumph of William McKinley:
Why the Election of 1896 Still Matters. New
York: Simon & Schuster. 2015.
Strouse, Jean. Morgan: American Financier.
New York: Random House. 1999.
Wharton, David B. The Alaska Gold Rush.
Indiana University Press. 1972.
Yukon Territorial Archives. 32/221 MSS40, file
2 of 2.