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The Cabin Boy Who Became a Multimillionaire

K-G Olin

At 3:30 in the afternoon of October 18, 1867, the Russian flag was lowered at the Russian American Company's headquarters on Sitka Island. It was an historic ceremony. That day was the last time the Double Eagle would wave over Alaska. Russia had sold her American colony to the USA for 7.2 million dollars.

In the middle of the ceremony something unexpected occurred. As the flag was on its way down it got caught and, despite repeated attempts, wouldn't come loose. A Russian seaman had to climb up the pole and get the flag loose before the ceremony could continue. It was as if the Russian Double Eagle refused to make way for the Star Spangled Banner.

In the large crowd which watched the ceremony there was a young Finlander for whom the takeover had a very special meaning. The new conditions would give him an opportunity the caliber of which comes only once in a lifetime. He was prepared to take the chance and to bet everything on one card.

The handsome young Finlander was named Gustaf Ferdinand Nybom and came from Helsingfors. He had arrived in Alaska as a sixteenyear-old cabin boy on board one of the Russian American Co. ships. He returned home to Finland and passed the master's exam. Back in Alaska he worked first as helmsman but soon advanced to captain on one of the company's ships.

In conjunction with the American takeover of Alaska, the Russian American Co. equipment and properties were sold. Nybom, together with four partners, managed to purchase one of the company's brigs for $4,000. These five partners created a company which was called Hansen, Nybom and Co.

At the end of November the same year, Nybom and other shareholders sailed away in the brig. Their goal was the Pribilof Islands in the northern Pacific Ocean. That which lured them to the distant islands was the possibility of buying up valuable seal skins. This was hardly a safe journey that late in the year. Several days before Christmas they arrived at the main island, St. Paul, where Nybom went ashore and raised the American flag.

Among the local residents, who were almost entirely made up of Aleuts, those coming ashore were met with deep suspicion. This was occasioned partly by the late time of year, when normally no ships dared fare those waters and partly, of course, because the brig was sailing under the new American flag. Luckily, the Aleuts recognized Nybom from his earlier visits to the island.

The Pribilof Islands' main importance was derived from the fur seals which found their way there every summer in order to mate. The seals were as valuable a prey as they were easy to catch. A group of hunters consisting of a number of Aleuts chased thousands of the helpless seals to a spot from which they could not escape. There the men chose those animals they wanted to kill and let the remainder return to the seal colony. The seals were killed by hunters hitting them on the head with long clubs. This method of destruction was very effective. A good hunter could kill a seal with the help of a single welldirected blow.

Nybom and his partners succeeded in buying up 11,000 seal skins over several days on St. Paul. When it was time for the fur buyers to sail away, one of Hansen, Nybom and Co. stockholders, the German, O. Osche, stayed behind in a temporary house they had construeted on the island.

Nybom sailed with the valuable cargo of fur to San Francisco. There the furs were sold to August Wassermann, who was one of the owners of the firm of Hutchinson, Kohl & Co. This firm had bought up the old Russian American Co. warehouses, ships and network of trading stations in Alaska. The owners of Hutchinson, Kohl & Co. wanted Nybom and his partners to join forces with them. In the preliminary negotiations, Nybom soon emerged as the one to set the tone in Hansen, Nybom & Co. It was proposed that the five partners of the company receive half of the shares in Hutchinson, Kohl & Company if they agreed to a merger. Of those five, it was finally only Nybom who snapped up the offer. The remaining partners of Hansen, Nybom & Co. were bought out and only Nybom went in with Hutchinson, Kohl & Co. He became one of the company's seven shareholders with one-seventh of the stock.

Competition for Furs

That very same year Nybom took himself back up to the fur islands. This time he was in command on board a steamer which belonged to Hutchinson, Kohl & Co. The journey went via Kodiak and Unalaska. By April they were up to St. Paul. There Nybom and his crew were forced to notice that they were no longer the only ones in the garden patch. Another group of buyers [Morgan's group] had landed there. They attempted to trick the German left behind into believing that Nybom's brig had sunk during the trip to San Francisco. In that fashion they tried to get him to sell Hansen, Nybom & Co. stocks. When the German refused to sell, they simply drove him out. After that the German had to seek shelter among the Aleuts.

The whole summer the atmosphere was extremely tense between the two groups, and on several occasions there were near altercations.

In the summer season of 1868, Nybom succeeded in buying up 132,000 pelts on St. Paul. Morgan's group, on the other hand, couldn't get more than 34,000 pelts. Such skimpy results on the part of the competition mostly depended on the fact that he didn't have cash to pay for more pelts. On the neighboring island, St. George, another group of buyers had set in motion a lot of disruption. Nybom managed to clear up the confusion and in addition bought up around 65,000 pelts on the island.

An obvious risk arose out of the large number of buyers on the Pribilof Islands: that the entire

seal stock could be wiped out within only a few years. This made the American government step in and protect the seals that very fall.

In October of 1868, Hutchinson, Kohl & Co. was restructured. A new company called Alaska Commercial Co. (ACC) was founded by the former owners reinforced with some of the earlier competitors as well as interests with political clout. The new company bought out all of the Hutchinson, Kohl & Co. assets for $1,729,000. The price signified a substantial profit for the partners in the old company.

ACC began to carry out an intensive campaign to get authorities in Washington, D.C., to go along with easing up on the protection of seals in the Pribilofs. Their lobbying activities were crowned with success. As early as 1869 the company succeeded in getting permission to buy up a limited number of pelts on the islands. The following year the American Congress passed a resolution to sell to the highest bidder the right to hunt the Pribilof Island seals for twenty years to come. In addition to the bid itself, the company had to be deemed adequate to handle the business. ACC didn't turn in the highest bid. But in consideration of its suitability, the company won the opportunity to adjust their bid upwards and despite widespread protests were designated to run the fur exporting from the Pribilof Islands.

According to the contract which was created, ACC got permission to take out 100,000 seal skins from the islands annually. Three-fourths would be taken from St. Paul and the rest from St. George. The company was to pay a fee of $55,000 annually to the government, and $2.625 in taxes per pelt. A tax of 55 cents per gallon was set on the seal oil which was produced.

According to the contract, ACC was supposed to supply the Aleuts with seal meat as well as 25,000 dried codfish every year. The company was also supposed to give Aleuts firewood as well as barrels for curing the salted seal meat. It was further established that ACC would be responsible for establishing schools for the children eight months per year. The responsibility for health care as well as care for widows and orphans among the Aleuts was also placed on the company. These were noticeably better conditions than the residents of the Pribilof Islands had earlier. An agent sent out by the American government checked on whether the requirements were fulfilled.

The Largest Fur Company

The monopoly meant that ACC became the world's leading fur trading company in just a few years. Nybom himself estimated that the company had 90 % of the market for sea otter pelts and 75 % of the seal skins. ACC additionally gathered 5,000-6,000 fox furs, 8,000-10,000 beaver pelts, and around 2,000 bear skins annually. The biggest competitor, Hudson's Bay Co. in Canada, specialized more in the smaller pelts and was also the market leader within that division of the fur business.

ACC had the luck to get in precisely during a period when seal skins rose in value. During the Russian era, when overproduction dominated, the price could reach as low as only $1.00 per pelt. At that time the main market lay in China.

By concentrating on quality before quantity, ACC was suceessful in making the furs attractive to the European market and the price rose to $15.00. All told, ACC took out nearly 2 million seal pelts from the Pribilof Islands during the twenty years the company held the monopoly. The net profit from the fur trade alone during that twenty-year period reached no less than 18 million dollars, a neat little sum those fourteen stockholders could divide up. ACC turned over 9.7 million dollars during the twenty-year period in payment to the American government. That was a sum which exceeded the purchase price for all of Alaska by $2.5 million. Besides the fur trade, ACC invested in a succession of other business fields. The company thus became the owners of all the buildings which had earlier belonged to the Russian American Co. ACC based trading posts in all those districts where the Russian company had earlier been active. In addition, they established several dozen new ones. At its' largest, ACC's network included 91 units, of which two were located on the Russian side of the Bering Sea. ACC had no monopoly on ordinary trade but had to withstand intense competition from other companies in many areas. When ACC's 20-year contract on the Pribilof Islands ran out, it was generally assumed that the company would get to renew it for an additional 20 years. But that was not the case. Their competitor, North American Commercial Co., had a bid a shade higher, and this time the decisionmakers didn't assess the eligibility of the bidder. There was grousing too that politicians inimical to the company had leaked the size of ACC's bid. Nevertheless, ACC had their trading fleet left, a number of plants for canning salmon, and the extensive network of trading stations throughout Alaska.

Through selective hunting during the period of their contract, ACC had succeeded in getting the seal stock to replenish itself. But their successors were not so farsighted. When the second contract ran out in 1910, the seal stock had been catastrophically decimated. Contributing to the heavy decline was widespread pelagic sealing, that which occurred out at sea. During the period when the seals migrated between California's coast and the Pribilof Islands, this was an easy job for hunters aboard smaller boats. The hunt was illegal, but the American Navy could not possibly guard the whole enormous ocean.

The worst thing about pelagic sealing was that it wasn't selective. That meant that for every female which was killed out at sea, her living and her still unborn kids were destroved as well. As a result, a large loss of injured animals occurred which fled and were not taken care of by the sealers. It was estimated that only one of ten dead seals could be gotten on board the vessels out at sea.

One of the most successful pelagic sealers was moreover a countryman of Nybom's. His name was Viktor Jakobson, and he originally came from Killingholmen outside of Jakobstad.

[To be continued]

K-G Olin, SFHS member, well-known writer and historian, is a frequent contributor to our Quarterly. Translated by Syrene Forsman.

Published by The Swedish Finn Historical Society Quarterly, Volume 7, No.1, January 1998

© K-G Olin

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