Gold Buggers

MARK TWAIN KNEW a lot about throwing money away, starting with a failed try at silver mining in Nevada and culminating in a string of bad investments and unprofitable land deals. But he got revenge by making fun of rural con artists in The Adventures of Huckleberry Finn and shifty plutocrats in the novel he called The Gilded Age, co-written with Charles Dudley Warner in 1873. Until recently, this era of flimflam often seemed like a distant Puck cartoon of capitalist egregiousness: titans roaming the continent in private railroad cars to the next field of plunder; the rise of the corrupt political boss, aptly caricatured with a moneybag for his head.

Thanks to the current administration, we can’t look as far down on squalid 19th-century politics as we once did. And so it is a particularly good subject for Paul Starobin’s new book, A Most Wicked Conspiracy: The Last Great Swindle of the Gilded Age, about the Alaskan gold craze of 1899–1900.

The breathtaking money-making scheme of the title stretched from Nome to Bismarck, from Manhattan to Washington, DC. Even President William McKinley had to get involved. But a writer has to keep his scorn in check at least until the messy conclusion, presenting the main actors in relief as they build their conspiracy, and trusting readers will judge for themselves in the end. “As disreputable as this all seemed,” writes Starobin, “the popular longing for immense quick wealth was a fervent conviction of the times.” 

The mastermind of the scheme was Dakota political boss Alexander McKenzie, of whom The Seattle Times hyperbolized only slightly that “McKenzie is in North Dakota what Napoleon I was in France.” More specifically, Starobin explains, McKenzie was:

a maker of US senators, with connections to the Executive Mansion, as the White House was then called, and to the most powerful business moguls in the nation. […] Naturally, he planned to cut in his friends. This was, after all, the time in American life known as the Gilded Age, and the bosses operated like lords of the realm, dispensing and receiving favors as a matter of course. The question was, Who would stop him?

Who indeed, for the virus of gold was in the national bloodstream, and McKenzie usually got what he wanted when there was money to be made.

In September 1898, a Norwegian immigrant named Jafet Lindeberg found gold in the sand along a river near what became Cape Nome, Alaska. Miners swarmed to what they named Anvil Creek, and cooperation briefly followed as they staked out claims along the beachfront in an equitable division of potential spoils. But as Starobin explains, such times are usually too good to be true when gold is involved. Claim jumpers appeared, challenging the rights of the original Norwegian- and Swedish-born discoverers, but the petty thieves were soon outmatched by larger predators and more sophisticated stealing.

The conventional rule had been that a foreign-born miner had a right to stake a claim so long as that person had legally declared the intention to become a US citizen. After the discoveries at Cape Nome, bright opportunists went to work to grab the whole lot of claims by making ownership by “aliens” null and void. Dozens of rightful claims were overturned, first by local jumpers, and later by the formation of a confiscation engine that Alexander McKenzie named The Alaskan Gold Mining Company. 

The “McKenzie machine” went to work turning the grievances of American-born miners into a larger attempt to steal the gold from immigrant Swedes through the use of the political system and a judge under McKenzie’s thumb. McKenzie’s risk was minimal, as he

proposed to pay for claims not with cash but with certificates of stock — in fact, not even with the certificates themselves, for none yet existed, but with promises of shares in a company still to be formed, the claims serving as its “assets.” With his influence in the worlds of politics and finance, McKenzie vowed, he would be able to make these paper shares worth a lot of money.

McKenzie succeeded for a time in getting the gold rerouted to his pockets, before his standing was challenged in the Ninth Circuit Court of Appeals, in San Francisco.

In the Senate Committee on Territories, language was inserted in a new civil code for the governance of Alaska, declaring that “Aliens shall not be permitted to locate, hold, or convey mining claims” in the territory, but further, claims previously held by aliens were invalid, as were those sold by them to native-born citizens. In other words, all would be fair game for the Alaskan Gold Mining Company. But several dedicated senators in Washington stood in the way of the plundering. Nevada’s William Morris Stewart, while hardly opposed to making money, was a former silver miner who hated a claim jumper as much as a horse thief. He saw McKenzie’s bill for what it was. “Now, the question,” he said on the Senate floor, “comes right down to this: Is the Senate to legislate one man’s property into the hands of another?”

The air finally went out of the conspiracy’s tent when the Ninth Circuit ruled against McKenzie, and then had him arrested for contempt when he refused to return the gold to its original owners. He was sentenced to a year in Oakland’s Alameda County Jail in 1901, his fate resting uncomfortably with his ally President William McKinley, who months before had signed the Gold Standard Act. Discussions were arranged. In the end, McKenzie claimed physical injury as a reason to be freed rather than admit real wrongdoing. Whether the president knew for certain it was a lie or was just grateful for the political cover for his freeing an unseemly donor, the author leaves uncertain. He consented to a commutation of his sentence, three months time served, in May 1901. But to a man like McKenzie, pardoned or commuted made little difference, a walk was as good as a hit.

In this anatomy of a swindle, Starobin clearly relishes the tale he brings to life and separates the colorful victimizers from their victims, patiently evoking the lives of both in atmospheric detail, from the curious Alaskan wildlife when miners first dig into the iron-tinged sand to his antihero’s early years as a frontier sheriff. It is an able narrative that blends business and political history and ends up with a message of qualified hope: it was the American people themselves who finally put an end to the excesses of the Gilded Age, through the revelations of muckraking journalism and innovations of the Progressive era, particularly the direct election of US senators, which lessened the power of senator-making political bosses. This cautionary story is a pleasure to read.

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Nathan Ward is the author of The Lost Detective: Becoming Dashiell Hammett (Bloomsbury, nominated for Edgar and Anthony Awards) and Dark Harbor: The War for the New York Waterfront (Picador), about Mike Johnson and the true crime story of the New York docks that inspired Elia Kazan’s masterpiece On the Waterfront. His forthcoming book is Ulysses of the Wild West (Grove).