YUKON-CHARLEY RIVERS The World Turned Upside Down: A History of Mining on Coal Creek and Woodchopper Creek, Yukon-Charley Rivers National Preserve, Alaska

IMPACTS OF WORLD WAR II

Gold Placers, Inc.'s dredging operation on Coal Creek began in 1936. Alluvial Golds, Incorporated started on Woodchopper Creek the following year. Over the next six years, the two companies, in full production, extracted 89,975.454 ounces of fine gold (46,825.639 from Coal Creek and 43,149.815 from Woodchopper Creek). As international events continued unfolding in both Europe and Asia, war conditions made gold mining difficult at best, especially in a place as remote as Alaska.

By early May 1941, it was becoming obvious that the demand for strategic and critical metals, primarily non-ferrous metals like copper and lead, was out-distancing the availability of the machinery, materials and facilities, to produce them. Continued competition with the gold mining industry exacerbated the situation. The increase in demand to support the planned two million-man army for the US, and the needs of the Allies would only compound the problem. Consequently, the Office of Production Management [1] issued a preference rating order titled "First Priority Control on Mining Machinery: Order P-23." Under Order P-23, an A-3 rating for material deliveries was needed for producing mining machinery. The order applied only to a selective list of qualified manufacturers. Although the intent of Order P-23 was to aid most underground non-ferrous metal mining operations with war time significance including drilling, blasting, loading and transport, crushing and elevating ores, the same concerns also applied to coal and base metal mining. It was quickly becoming apparent that gold mining was also one of the industries supported. With an expiration date of November 30, 1941, the order was intended to be short lived. It soon became evident that although gold mining accounted for an extremely small percentage of new mining equipment going into production, the use of maintenance and repair equipment in gold mines was much greater. [2]

The Office of Production Management re-visited the situation in the early autumn of 1941. The result was to exclude placer gold mines from priority ratings under Preference Rating Order P-56 on September 17, 1941. This order granted each mine whose operations were deemed "important from the standpoint of defense or essential civilian needs," a serial number that allowed the company to apply for a priority rating under the order. A preference rating of A-1-a was assigned to repair material deliveries to a mine in the event actual breakdowns occurred minimizing delays in resuming production. General repair parts and mine supplies were assigned an A-8 rating. Order P-56, intended to facilitate an uninterrupted flow of essential materials to the war effort, covered approximately 15,000 mines. [3]

Gold placer mines were not granted serial numbers and were thus cut off from the priority benefits of Order P-56. Wilbur A. Nelson, who served as Priorities Specialist and Administrator for Order P-56, explained the rationale behind the move as: "we felt that we must start restricting mining activities where they were not essential to the production of materials needed in a defense effort." [4] An additional reason for the restrictions on placer mines centered on the fact that these operations were often, operated only seasonally. As a result, the government assumed that their operations could be discontinued without equipment deteriorating. [5] Nelson further explained that placer mining operations could apply for a lower priority (A-10) under Preference Rating Order P-22. Using form PD-1, mine operators could apply for a specific piece of equipment in special cases. Nelson said that his office would "expedite [the purchase] as promptly as possible, provided [the owner] is not asking for an unreasonable amount of materials. In other words, we wish to keep the mines going on a restricted basis and not to dislocate any more labor than is necessary." [6]

Almost immediately cries of discrimination against the gold mining industry reverberated throughout Washington DC. The loudest of these came from Alaska and other western states where placer mining was a major industry. Out of 7891 gold and silver mines in the western United States and Alaska, in 1941, 3349 were placer operations. Out of 855 gold mining operations in Alaska, 799 worked placer deposits. [7]

Because placer mining accounted for a very large number of both jobs and territorial revenue, the Supply, Priorities and Allocations Board (SPAB), in issuing its "Status of Gold Mining Report" in late 1941 suggested that:

Some special basis of treatment might be worked out for Alaska, where gold-mining assumes the proportions of a major industry. To cut off suddenly all shipments of new equipment needed for replacement, and to make it unduly difficult to secure supplies, might have severe effects upon employment in Alaska, and upon the revenues of the Territory. The Labor Division might be asked for a formal opinion on the probable impact upon employment in the Territory of . . . suggested restrictions. The Territorial Government could also be asked for a formal report on the importance of gold-mining, with all relevant statistical data. [8]

Steamer Yukon at Eagle, Alaska. NPS photo, Bill Lemm Collection.

Increasing tensions, followed by the actual outbreak of war late in 1941, profoundly affected Alaska. Unlike the Lower 48, Alaska was the only territory under the United States flag that was occupied by the Japanese during the war. [9] Because of its strategic, centralized location plans for the defense of the territory led to adopting many restrictions on normal living and business operations. Increased construction and manufacturing in aircraft and other war-related industries placed demands on materials needed to continue dredging operations. Items such as heavy machinery, petroleum products and steel alloys were being diverted to the war effort instead of mining. [10] Construction of the Alaska Highway took much of the mobile equipment such as draglines, tractors and grading equipment away from mining. In addition, higher wages paid by military contractors lured away the experienced labor supply that previously worked the dredges. Drastically increased transportation costs along with reduced shipping schedules served to slow dredging operations in Alaska.

The 1942 season was particularly difficult on Gold Placers Inc. and Alluvial Golds because the river steamer on the Yukon only made three round-trips. According to Patty, the only thing that kept the Gold Placers Inc. operation going was the fact that the company maintained a large inventory of parts and supplies on hand. He further commented that, "The loyalty of our older employees in staying with us during this period is highly commendable." [11]

On March 2, 1942, the board amended Preference Rating Order P-56 specifically excluding gold and silver mines from ratings assigned by the order. This in fact barred these mines from obtaining any materials and machinery necessary to continue operating. [12] Again, the outcry from western states was almost immediate. Of particular concern was the outright exclusion of all operations deriving thirty percent of their profits from gold or silver. As an example, echoing the cries of other western states including Alaska, Governor Herbert B. Maw of Utah pointed out that:

We have one of the largest copper mines in the world, but not counting that, the silver and gold mines produce ten million ounces of silver a year, one hundred fifty million pounds of lead, eighty-seven million pounds of zinc. Yet, the value of the gold and silver is 40.8 percent of the total value of the ore taken out. That would mean . . . if the order were enforced, every single gold and silver mine in Utah except for one small one . . . would be closed down . . . Forty percent of the people of Utah are dependent almost entirely on the mining industry for their livelihood. Shut down our silver and gold mines, and we will be moving out. [13]

When asked by Senator Pat McCarran, of Nevada, where the thirty percent "figure came from, who is responsible for it?" Wilbur A. Nelson, administrator for Order P-56 quickly passed the buck replying, "The orders were drawn by the Priority Division, not by the Materials Division. I am in the Materials Division." [14]

The following May, allegations about discrimination were corroborated during hearings before the United States Senate. [15] Consequently, the board eliminated the "thirty percent" clause from the amended order. This action removed psychological if not actual deterrents to obtaining mining machinery for placer operations. The War Production Board stated that simply changing the language of Order P-56 would "have no practical effect, as no person can use the ratings assigned; unless a serial number is assigned by the Director of Industry Operations, and gold and silver mines which produce no substantial quantities of critical materials have not been and will not be issued serial numbers." [16]

Because copper was in critically short supply, government officials hoped that sufficient numbers of miners who previously worked in gold mines would move over to copper in support of the war effort. Finally, on October 8, 1942 the War Production Board issued Order L-208 declaring gold mining, with few exceptions, a non-essential industry. [17] In the Order, the Board called for virtually closing down all non-essential mines as rapidly as possible. In addition, it deprived them of further supply and equipment allocations. As a result, all of the major gold mining operations throughout the territory (as well as the United States as a whole), except those specifically exempted, suspended operations. [18]

Many of the crewmen working for Gold Placers Inc. and Alluvial Golds Inc. were drafted into military service. During September and October of 1942, Gold Placers Inc. lost an average of one man per week for army service — and it was impossible to replace them. [19] Other workers were attracted elsewhere by the high prevailing wages in war-time industries. It was difficult to hire experienced point drivers and dredge crews. At first, the company relied on nature to thaw ground ahead of the dredge. Then, when this was not as productive as hoped, Patty hired seven Natives from Eagle and brought them to Coal Creek where they trained as point drivers. He noted in his report that "they worked out much better than anticipated." [20] Relying upon inexperienced labor and higher competitive wages led to ever-increasing costs associated with operating on both creeks.

By 1943, overall gold production from Alaskan dredges dropped to less than one-sixth of what it was just two years earlier. This is in part due to Order L-208 and its immediate effect of closing down the industry. Given the difficulty mining companies found themselves in with attracting experienced labor, it is likely that operations would have been curtailed to a vast degree by natural attrition as companies suspended work until the end of the war. The real losers under Order L-208 were the individual small operators, mining communities, and the territorial government that drew almost one-third of its revenue from taxes on mine output. Large companies like the Fairbanks Exploration Company and the United States Smelting Mining and Refining Company (in Nome) were sufficiently diversified in other areas of mining, smelting and refining to weather the troubles of World War II in fairly good shape. [21]

Although the outlook for continued dredging was not particularly pleasant the crew moved Coal Creek camp, and all of its associated buildings, from its original location to a new site opposite drilling line 12 during the winter of 1941-42. [22] This placed the camp between the Coal Creek-Woodchopper Creek road and the dredging area, on the west side of Coal Creek, opposite its confluence with Boulder Creek. Today evidence of the camp includes several structural depressions and a can/trash dump approximately 50 yards downhill from the main road between Coal Creek and Woodchopper Creek.

Dredging operations on Woodchopper Creek during 1942 faced an interesting problem. The ground the dredge worked was tightly packed with sediment that was almost as difficult to dig as if frozen. This sediment acted like soft cement. The bucket chain would actually break a granite boulder into pieces before the sediment released it from its grip. [23] The company considered drilling the ground and "shaking it up" with explosives before bringing the dredge through it. However, because it was high-grade ground, they decided simply to work the dredge carefully to avoid damaging their equipment.

Although production was down to slightly more than 60% of that in 1941, the Territory of Alaska taxed excess profits. Working the ground more slowly held production down and in the end, the company was able to maximize its profits — yet remained below the level qualifying for the excess profit tax — and avoided any serious breakdowns with their machinery.

At the close of the season, in anticipating the possibility that the dredge might not operate for several years, the crew dug a shallow area just ahead of the dredge pond. They then raised the water level in the pond and floated the dredge onto the shelf. Then, on October 12, 1942, they lowered the water and the dredge settled onto the bottom for safe storage.

Operations at the Alluvial Golds Inc. camp on Woodchopper Creek shared equally in the difficulties facing mining companies because of the war effort. However, the company also tried to "participate constructively," as Patty called it, in the war effort by using some of their cash reserves to carry out a "determined field program to locate a commercial war mineral deposit." These efforts focused on a very wide range of minerals including cinnabar (mercury), zinc, manganese, tin, lead-zinc, antimony, tungsten and copper. The prospected areas included Alaska, British Columbia, Washington, Oregon, Nevada and Montana. The company spent over $10,000 from its general exploration account writing it off as a loss against the year's operating profit. Their efforts resulted in a nickel prospect near Winesap, Washington that showed indications of being profitable. They applied to the Reconstruction Finance Corporation (RFC) for a $20,000.00 development loan. Optimism for getting the loan ran high after the RFC field engineer examined the property. [25]

In recapping the first six years of the operation on Woodchopper Creek, Patty calculated that the dredge processed 1,965,800 cubic yards of material with a mineral yield of $1,512,768.39. From that, deducting operating expenses left a profit for the company, for the same period, of $65,162.09. In addition, the company paid off the Reconstruction Finance Corporation loan used to purchase the dredge ($280,000.00), paid out dividends to shareholders ($120,000.00) and repaid General McRae's initial capital advance ($41,438.36). Overall, true to the early USGS predictions, the Woodchopper Creek placers turned out more valuable than those on Coal Creek. [26]

Coal Creek dredge, early 1940s. Note the characteristic "crescent" shape to the tailings behind the dredge. Each ridge represents one cut by the digging ladder across the digging face of the pond, after which the dredge is "stepped forward" to make another cut. NPS photo, Bill Lemm Collection.

To quote an oft-times over used phrase, in 1943, "It was the best of times. It was the worst of times." [27] Gold Placers Inc. did not operate its dredge on Coal Creek that season. Alluvial Golds Inc. had one of their hardest years on record at Woodchopper Creek, beginning with finding a crew that was willing to work for the wages the company could afford to pay. In the end, Patty was able to hire an eight-man crew to work the dredge with a woman to work as the camp cook. Later in the season, he hired a Native from Eagle for general work about the camp. Patty commented in his annual report that: "This skeleton crew, chiefly of men past the age of sixty years, remained on the job throughout the season and their loyalty, energy and cooperation was one of the bright spots of the year." [28]

On the other side of the coin, the ground in which the dredge operated was almost completely thawed naturally and required only a single thawing unit to break up the "seasonal frost" (gravel that froze during the winter and required thawing before the dredge could start the season). The remaining gravels were never exposed to thawing points at all. With the exception of an occasional small area of frost, dredging went on without difficulty.

In addition, the dredged ground was some of the richest that either company encountered. Averaging $1.11 per cubic yard in 1942, it declined slightly to 70.8¢ per yard in 1943. Based on prospecting estimates, the company expected to remain in gravels with these values for several more years. [29]

Patty was able to secure permission from the War Production Board to operate one of their Alaskan dredges during the 1943 season. This permission was premised on several additional restrictions:

1. All employees except the General Manager and superintendent must be hired from within the Fairbanks area;

2. The War Manpower Commission Office at Fairbanks must approve the employment of each individual on the crew and reserved the right to withdraw any member of the crew if at any time that man was needed for essential war work.

Fortunately, the Commission did not make any withdrawals until late in September when it took one man, an experienced driller, to drill water wells at several new airfields. [30]

The difficult digging conditions from the 1942 season continued to plague the company in 1943. These improved somewhat as the season progressed. This is borne out in the increased digging capacity of 113 yards per hour in 1943 as compared to only 75 yards in 1942. Because of the limited size of the crew, they were only able to work two ten-hour shifts per day. The dredge worked a total of 95.3 days from June 18 through September 22. During this time, they processed 199,500 cubic yards of gravel recovering almost $150,000.00 of gold. Dredging costs appeared higher this season because the company installed forty new buckets and a new spud on the dredge at a cost of $12,000.00. Factoring out these exceptional expenses, the actual 1943 costs were 2¢ less per yard than those in 1942. [31]

Perhaps one of the most amazing things about the 1943 season is the lost time record the "skeleton" crew accomplished. Unlike previous years, four hours each day were lost when the dredge was shut down simply because there were not enough men to operate it. The same crew also carried out clean-up operations. Under normal operating conditions, the dredge crew would carry out repairs while the clean-up crew did their work. By eliminating lost time due to cleanups, moving the dredge ahead and oiling, the 1943 crew was able to maintain dredging operations for 97.6% of the available working time. Patty accredited this "exceptional record" to the fact that "the company regularly maintained their equipment in good mechanical condition; that [they] had on hand a good stock of spare parts; the skill of the men in handling the equipment and last but not least, such good luck." [32]

Due to the war effort and the government ban on gold mining, neither Gold Placers Inc. nor Alluvial Golds Inc. operated during the 1944 season. In 1945, under a special dispensation from the government, Gold Placers Inc. resumed operations with a limited crew. The government rescinded Order L-208 on July 1, 1945. During the season, the dredge produced gold with a gross value of only $123,130.49. This accounted for the second lowest production year in the company's history. [33]

Order L-208 had tremendous impacts on the gold mining industry throughout the United States. As illustrated by the following table, the value of gold produced in the US declined almost 75% over the four-year period from 1940 to 1943.

Value of Gold Produced in US Mines (1940-1943) and the Effect of Order L-208 [34]

The only exception to the dramatic impacts Order L-208 had on the gold mining industry was the increase in gold production in Utah. This is attributed in part to the increase in production at the Bingham Copper Mine west of Salt Lake City and the associated increases in gold and silver recovered as "by-products" generally found in conjunction with copper.

In Alaska, where gold mining counted as one of the major industries in the territory, the various orders cut production by 85.9%. Although the stated expectation was for miners to move from gold mining to non-ferrous metal mining (primarily copper and lead), the fact of the matter was that Alaska was so far removed from the major non-ferrous metal mines that few Alaskan miners actually helped in producing minerals essential to the war effort. Those miners displaced by the idled gold mines sought employment in a variety of areas including building military bases in the territory and other war-related projects.

Penstock on the Coal Creek ditch. The penstock serves as a reservoir to hold water and build pressure or "head" for the water to force through the pipes used in the thawing and stripping process. The flag, visible on the penstock, indicated the level of the water to the crews working in the valley below. The main hydraulic ditch is visible running across the valley on the right, with a bridge supporting it across Coal Creek. Everett Hamman Collection, University of Alaska—Fairbanks, Rasmuson Library (Acc.# #85-110-09).