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

1951 DREDGING SEASON

In 1951, the Coal Creek dredge had a rather profitable year in spite of the fact that the daily yardages were down by almost 25% over the previous three seasons. [1] Although the quantity of gravel processed was down, the actual value of that gravel was up to an average of 57.1¢ per yard. This was due in part to the fact that the dredge encountered several areas of bedrock that formed ribs which created natural riffles concentrating the gold more heavily than in other areas. Generally when dredging, the bucket chain scoops up the gravels lying on top of the bedrock, and also takes the top foot or two of bedrock thus "thoroughly cleaning" all of the gold. By doing this, not only did the dredge encounter these rich concentrations of gold, it also brought up some of the largest nuggets found on the creek up to that season. One weighed in at 5.25 ounces with a value of $162. [2]

During 1951, the paystreak on Coal Creek widened more than the company had experienced in the previous seasons. The dredge maintained a working face [3] of 500 feet and advanced 1450 feet downstream toward the Yukon. Considering the total amount of gravel processed was 292,100 cubic yards, the dredge was digging an average of almost 11 feet deep through this area. [4]

By the end of the season the company had dismantled the camp preparing to move it downstream to the vicinity of Beaton Pup. There it would be more accessible for the dredging operations as they continued advancing toward the Yukon. The former location was approximately two miles above the dredge and brought in both logistical and economic problems with transporting each of the three crews back and forth from the dredge to camp each day.

The company originally constructed the camp buildings on wooden skids with the intent of moving them from one location to another as needed. Since the camp had remained at the previous location for a number of years, the skids had begun to deteriorate and rot. It was necessary to replace them on all fourteen buildings before moving them. Following the first snowfall of the season, in October, the company began moving all of its buildings and support facilities downstream to an area adjacent to the new machine shop. This served the operation for the remaining decade that they were on Coal Creek and remains in that location today. [5]

Gold Placers, Inc. began acquiring interests in various claims on Coal Creek in 1935. Under the terms of the option for the Nels Nelson claims, the company had been making annual payments of $1,000 his estate. In 1951, Gold Placers, Inc. made the final payment that gave them full title to all the claims on the creek. In addition, Samuel Harvey's estate and William Spooner, both of whom held minority interests in claims the dredge operated on, were paid $700 and $250 respectively to acquire their interests outright. This avoided paying the two men royalties on gold recovered from these claims. [6]

The company continued struggling to keep experienced crewmen on their payrolls. In 1951, Patty reported that the wages paid by Gold Placers Inc. were only 60% of those paid for mechanical work in the defense construction industry around Fairbanks. In his report to the company directors, he stated that:

For several years, we have given up all attempts to compete with these high wages but we have still been able to secure enough 'old timers' to keep one dredge running. So far as we can determine most of our crew will be back with us again in 1952. [7]

Because of the difficulties facing both companies, Patty recommended that the Gold Placers Inc. properties be left idle in 1952 with the crews focusing their attention on the Alluvial Golds Inc. properties over on Woodchopper. In addition to the problem of hiring enough crewmen to man both operations, Patty also believed it to be a "wiser policy to not use up our reserves too rapidly under present unfavorable conditions for gold mining." He continued to hold out hope that the value of gold would rise within the next several years. [8]

THE 1952 SEASON

Heeding Patty's recommendation, the crew worked Woodchopper Creek in 1952. During a season of 142 days, the dredge processed 350,000 cubic yards of gravel recovering approximately $150,000.00 of gold and silver. This accounted for a net profit of $27,126.17, translating into a dividend of $2.00 per share paid on company stock. [9]

From 1935 on, the companies (Gold Placers Inc. and Alluvial Golds Inc.) had maintained a solid working relationship with the White Pass & Yukon Route Company (WP&YR) who hauled freight between Dawson and the creeks. Owing to the decline in traffic and freighting along the upper Yukon, the WP&YR Company decided to abandon all river traffic and freighting below Dawson after 1952. A single vessel operated between Whitehorse and Dawson in 1953. The company actively considered abandoning all steamboat operations in 1954. [10] This would cause additional hardships on the two mining companies whose normal operating requirements called for between 200 and 250 tons of freight each season (mainly diesel fuel and various lubricating oils and greases for the dredge).

In order to replace the freighting services offered previously by the WP&YR, Patty opened negotiations with the Black Navigation Company of Fairbanks. Black Navigation operated two diesel driven tugs and several tanker barges between Nenana and Fort Yukon. Under the terms of the agreement worked out by Patty, Black Navigation agreed to make one trip to Whitehorse each season. During this trip, they would pick up all the freight for Gold Placers Inc. and Alluvial Golds Inc. delivering it to the mouth of Coal Creek. Before Black could enter into a contract with Patty, it was necessary that they (Black Navigation) have some word from the U.S. government regarding its contracts for hauling freight for the railroad. Because the government contracts were uncertain from year-to-year, Black was very interested in working with Patty. The alternative was to arrange for purchasing fuel, etc. in Fairbanks, and trucking it to Circle where it could be loaded onto small boats for the 60-mile trip upriver to the creeks. By Patty's estimate, this would add approximately 10¢ to the cost of every gallon of fuel. Absorbing these costs would push the envelope of operating costs vs. profit more and more, bringing the company closer to not being able to operate at all, on either creek. [11]

At the close of the season, on October 21, 1952, the Woodchopper dredge floated onto a shelf at the side of its pond. Then the water level was lowered and the hull came safely to rest for the winter. The area in front of the dredge was flooded and allowed to freeze, preventing the frost from penetrating deep into the already thawed gravels. Perhaps thinking optimistically, Patty stated that he hoped to start dredging by May 25 the following season. [12]

As is generally the case when starting any major business venture, it is difficult to predict what economic factors would drive the market. In 1952, Patty commented to the Board of Directors that he was "sorry now that we didn't put in a hydro-electric installation to power the dredges." [13] At the time the companies built the dredges it did not seem necessary to spend the additional capital electrifying the machinery. Continually climbing costs of diesel fuel and other petroleum products rapidly eroded the narrow profit margin on which they operated. Over the winter, Patty investigated the cost of converting the dredges. He found that at the present value of gold, the only way it would be feasible to switch over to electricity would be to find a used power plant fitting their needs.

Almost as if the company was regressing to earlier techniques to shave the barest of savings, stripping operations on both creeks were scaled way back in 1952. This season stripping consisted solely of ground sluicing off the overburden and muck by using the flowing waters of Woodchopper Creek and forcing the creek to meander across the valley, Alluvial Golds Inc. was able to keep its expenses to less than $5200 for the season.

Like a traveling army, a mining crew works on its stomach. During the 1952 season, the mess hall served 8,800 meals at an average cost of $1.79 per meal. This in fact showed a saving over the previous year's average cost of $1.83 per meal. Of the total mess charges ($15,752.48), $6,622.80 went toward the wages paid to the cook and waitress; this alone accounted for more than the $2.25 per day the company charged for board. By contrast, the US Smelting Refining and Mining Company charged $4.50 per day. [14]

With this dilemma, Patty considered raising the daily board charge from $2.25 per day to $3.00, still well below that paid by the big companies in Fairbanks and Nome. In order to offset first the increase in withholding taxes and second the drop in take-home pay, it would be necessary to increase wages sufficiently to cover the losses felt by the miners. Overall, this equated to an operating cost increase of about $4,000.00 per year with no actual take-home pay increase for the crews. The advantage of doing this was to put the company in a stronger position regarding taxes if the authorities questioned their board charges. It also meant that the company could continue operating. [15]

The only activities taking place at Coal Creek in 1952 were cleaning up the dredge and accumulated black sands from the previous season, when a sudden cold snap froze everything in the dredge. This amounted to recovering $15,787.00 in gold and silver. [16]

Although the Coal Creek dredge sat idle for 1952, crews continued to strip muck and overburden ahead of it. As at Woodchopper Creek, the crews used ground-sluicing methods such as diverting the creek back and forth cutting channels down to the gravels below. Due to a heavier than normal snowfall the previous winter, Coal Creek flowed strong and deep throughout the summer enabling the company to remove an estimated 350,000 cubic yards of muck at a cost of slightly over $7300.00. At 2¢ per yard, this season represented the cheapest stripping costs to date. By the end of the season, crews stripped sufficient overburden to expose approximately 1.3 million cubic yards of gravel ahead of the dredge. Patty estimated this would keep the dredge working for at least three seasons, assuming all other economic factors remained constant. [17]

In addition, during the summer of 1952, the company finished moving the various camp buildings to their present location near Beaton Pup. When management decided to move operations back over to Coal Creek, everything was in place.

The Gold Placers Inc, TD-24 moving a cabin. Note the skid logs placed under the cabin to slide it from place to place. Harry Gingrich is operating the tractor. Dale and Karen Patty Collection, photograph courtesy of Dale and Karen Patty.

THE 1953 SEASON

Alluvial Golds Inc. continued its slow climb recovering from the effects of Order L-208 and the competition for experienced labor. As Patty predicted, the dredge started on May 21, 1953 continuing through October 23 for 156 working days. During this time, production figures, as illustrated in the table below, increased on an average of nearly 12% over the previous season. [18] The largest increases occurred in total cubic yards dredged (16.6%), gold produced (16.2%) and overall production (16.2%).

Several factors came into play with the increase in the season's total yardage. Most importantly was the fact that flooding the ground ahead of the dredge to a sufficient depth prevented the frost from penetrating the gravel immediately ahead of the dredge. [21] This allowed the operators to begin work, as planned, on May 21 without breaking up the seasonal frost. A second factor involved using a more efficient crew than in previous seasons. Alluvial Golds Inc. increased salary rates somewhat to keep in line with other dredging companies. This eliminated, in part, the competition that was attracting men from the Yukon camps into Fairbanks. Although the salaries paid were still far below those offered by defense contractors, the crew at Woodchopper Creek was more long term (they did not quit for higher paying jobs elsewhere). Because of the lower turnover rate there was less time lost due to men learning new jobs, etc.

Although the company did fare better in terms of production, overall operating costs increased, primarily due to a sharp increase in the cost of diesel fuel and gasoline. Patty illustrated this by showing that diesel fuel increased from 30.7¢ to 42.9¢ per gallon. When put into perspective of a season's average consumption of 42,600 gallons of fuel, this amounted to an increase of almost $5,200.00. Fortunately, impacts were not as severe as they could have been. The company was able to operate using their old inventory of fuel for most of the season having an average increase of 7¢ per gallon (slightly less than $3000 for the season). Nevertheless, the company purchased their inventory for the 1954 season at the new higher price although it they made the purchases in 1953.

The WP&YR continued to run a single boat down river from Dawson during 1953 to supply the operations at Coal Creek and Woodchopper Creek. In order for them to agree to this however, Alluvial Golds Inc. and Gold Placers Inc. had to agree to a substantial increase in freight costs, including an increase of 10.2¢ per gallon on fuel. In addition to the higher freight charges, the suppliers at Skagway increased their prices by an additional 2¢ per gallon.

On the other side of the ridge, the buildings at Coal Creek camp were improved and rehabilitated at a cost of over $1800. This work included rehabilitating the mess hall, painting the bunkhouses and in general getting the camp into "ship shape condition" for resuming operations in 1954. [22]

During the two years the Coal Creek dredge lay idle a flood struck Coal Creek breaching one of the dams and filling the dredge pond with sand. Consequently, the crew removed the sand, strengthened and straightened the dams and finally refloated the dredge. At the same time, they built five additional dams across the valley, downstream from the dredge, to flood the exposed gravels shielding them against the winter frost. This work cost the company over $1000. [23]

In addition to the rehabilitation work and excavations around the dredge, the company spent $6556.60 for a single tractor to finish clearing isolated islands of muck from below the dredge. Patty's experiments had shown that leaving even a small piece of muck over the gold-bearing gravel would insulate the area enough to maintain the permafrost below. When the dredge hit these pockets of frost, it was almost like hitting concrete. Severe damage to the dredge could result. [24]

For the previous four years management decided it would be best, given the price of gold and the costs of recovering it, to alternate working between the two creeks every two years. Under this plan, they would work Coal Creek in 1950 and 1951 then Woodchopper Creek in 1952 and 1953. In his annual operating report in 1953, Patty proposed the idea of extending this to a four-year cycle. He based his recommendation in part on the heavy costs associated with re-starting production at the mine that had lain fallow the previous two years. He predicted that it would require nearly $23,000 to restart the dredge at Coal Creek. With a cash reserve of $6739, it would take an additional $16,000 to $17,000 to bring the Coal Creek properties back into production. Although this sounds pessimistic, the company was actually in a good position financially. When the dredge shut down at the end of the 1951 season, it was digging in high-grade ground. Drill tests ahead of it showed the values would continue. Patty expressed a desire to put in additional drill tests but explained that it was impossible to get "competent" drillers because they were all working on construction projects making higher wages than Gold Placers Inc. could afford to pay. [25]

In May 1953, the Board of Regents for the University of Alaska invited Ernest Patty to give the commencement address. At the same time, the university had undertaken a candidate search for a new president. Following Patty's address which was titled "Be Bold," the Board of Regents unanimously asked Patty to be the next university president. The problem was that Patty had not applied for the position, nor was he particularly interested in taking it. According to his son Dale, Ernest and Katherine tried to dissuade the regents by making what they felt was an unattainable request. They asked for a new house for the president, "equal to the title." Patty really thought he had them and was off the hook given the condition of the university and the economy of the day. According to Elmer Rasmuson, then president of the Board of Regents, they wanted Patty so badly that his "condition was nothing." [26]

Following several days of hurried negotiations, Patty agreed to consider the position if they allowed him to finish out the 1953 mining season. After realizing the financial and physical condition the university was in, he agreed to take the position sooner.

In planning for the upcoming season, Patty recommended that the company shift operations back to Coal Creek where they would remain for the next four years.

Patty also announced to the companies' Boards of Directors that the University of Alaska had offered him, and he had accepted, the appointment as president of the university. Because Ernest Patty was a man who put everything he had into a challenge, he reduced his active involvement with Gold Placers Inc. and Alluvial Golds Inc. He also dropped completely the Canadian ventures focusing his attention totally on the university. He suggested that the board appoint his youngest son Dale resident manager of the Alaskan operations in his place. The fact that his son had "learned the business from the ground up" and was "very familiar with every aspect of the operation" made him the logical choice to follow his father. [27]