BUILDING THE TRANSPORTATION INFRASTRUCTURE
During the mid-to-late 1890s, a series of interconnected eventsthe Hope and Sunrise gold strikes, the Klondike gold rush and U.S. Army Capt. E. F. Glenn's expeditionbrought dramatically increased attention to Alaska in general and the Kenai Peninsula in particular. The prosperity brought on by the gold rush, moreover, spawned scores if not hundreds of proposed railroad lines. Of those, the only major line that was actually constructed was the White Pass and Yukon Route, built from Skagway, Alaska to Whitehorse, Yukon Territory from 1898 to 1900.
As the twentieth century dawned, the vast interior region of Alaska remained inaccessible. Even though the interior was still largely devoid of non-Native settlement, a number of dreamers were convinced that the interior would grow and prosper if a railroad route could be constructed there. Several of these entrepreneurs organized development companies. Between 1900 and 1903 a total of nine railroad companies selected Valdez, at the northeastern end of Prince William Sound, as their ocean terminus; several of these companies, including the prominent Morgan-Guggenheim syndicate, backed up their plans by sending in survey crews.  Other development interests trumpeted the advantages of rival ports including Katalla, Nelson (later Cordova), and Portage Bay (later Whittier). Off to the west, activity centered around Iliamna Bay, on the west side of Cook Inlet. The Trans-Alaska Company, led by a Seattle engineer named Norman R. Smith, laid out a sled trail (a predecessor to a railroad) from Iliamna Bay to Nome during the winter of 1901-02. Three years later, the Alaska Short Line and Navigation Company surveyed a route from Iliamna Bay to Anvik. Several of the companies aiming toward Alaska's interior went so far as to grade several miles of right-of-way; inland from Katalla, rails were actually laid for a short distance. But none of these companies was successful in building an intercity railway. 
The Alaska Central Railroad Company was different. It was the brainchild of Seattle businessman John Ballaine, who had had a long political and military career in Washington state. In 1900, Ballaine began to study ways to develop a railroad on a new frontier, and in that pursuit he searched for "an all-American route through all-American territory to develop all of Alaska." He concluded that the easiest route for a railway connecting an ice-free port and the interior lay across the Kenai Peninsula and up the Susitna Valley to the Tanana River valley. His search for a harbor led him to the future site of Seward. In March 1902, he helped organize a company to further his goals, and three months later he sent two survey parties to the area to reconnoiter the proposed townsite and right-of-way. After their return, Ballaine wrote that "Resurrection Bay alone, opening directly to the ocean on the south side of the Kenai Peninsula, answered all my requirements to perfection." 
A year later, Ballaine proceeded to put his plans into action. The company purchased Mary Lowell's homestead (the only private land in the area) and filed a townsite plat in order to gain title. Company officials then began constructing a dock and roughing out a street grid. That summer, Ballaine and his settlement party left Seattle on the steamer Santa Ana, piloted by Capt. E. E. Caine. On board were 25 company employees, 35 other passengers, 14 horses, a pile driver, a sawmill, and tons of provisions. The ship arrived at the new townsite on August 28, 1903a date that has since been celebrated as Seward's founding dateand the party began to improve the area. The following April, company officials met on the dock and drove the first spike for the newly christened Alaska Central Railroad. By July 4 of that year, rails had been extended seven miles to the north.
Construction proceeded by fits and starts. By the end of the 1904 construction season, tracks extended 20 miles north of Seward, and a year later, tracks had been built into Placer River valley, another 25 miles up the line. (By August 1905, work had progressed to the point that steamers were being employed to move men and materials between Seward and Turnagain Arm. ) But after the 1905 season, work slowed due to the physical and financial difficulties involved in constructing the bridges and tunnels that constituted the so-called "Loop District." Two other events compounded Ballaine's difficulties: first, President Theodore Roosevelt's November 1906 decree withdrawing Alaska's coal lands from development, and second, the financial panic of 1907. Despite those blows, construction proceeded apace, and by November 1909 rails had been completed to Kern Creek (near present-day Portage), 71.5 miles north of Seward. 
By then, Ballaine's luck had run out. A year before, in September 1908, the railroad had gone into receivership, and without prospects for an immediate financial turnaround, the company was sold during the winter of 1909-10. The new Alaska Northern Railroad, however, was even less successful than its predecessor had been. The new owners, hoping to cut their losses, built no new track; they offered minimal service and allowed the line to deteriorate.  Seward's economy during its first decade of existence was almost completely dependent upon railroad construction activities and ancillary port functions. The town, built on speculation, was thus healthy and growing during its first several years of life. After the railroad went into receivership, however, dull times predominated for the next several years.
Seward's fortunes were revived in August 1912, when the U.S. Congress passed the so-called Second Organic Act for Alaska. Among its provisions, the bill created an Alaska Railroad Commission to investigate the railroad situation. Five months later, the commission concluded that a system based on private capital combined with government land grants was an unworkable way to construct a railroad into the Alaskan interior. (This system had been highly successful in the development of railroads in other western territories. Grim experience, however, showed that it fell short in areas where population and resources were largely absent.) The commission, therefore, recommended that the government purchase the existing Copper River and Northwestern Railroad (which ran from Cordova to Chitina and on to Kennicott), then construct a railroad from Chitina north to Fairbanks. But before that plan could be carried out, Woodrow Wilson defeated incumbent William Howard Taft and another challenger in the 1912 presidential election.
Shortly after Wilson took office in March 1913, he appointed a new team, called the Alaska Engineering Commission, to study the Alaska railroad problem. While the Commission was deliberating, Congress passed a bill, in March 1914, which authorized the construction of a railroad connecting interior Alaska to an ice-free port. No decision had yet been made regarding what route would be chosen, however, and for the next year speculation was rampant over that question. Although four routes were ostensibly being considered, the two serious contenders were an eastern route that would have ascended the Copper River valley and a western route that would have tapped the Matanuska and Susitna valleys. The three AEC commissioners, lured by the possibility of gaining access to the agriculture and minerals of the Matanuska and Susitna valleys, focused most of their attention on the western route. Thus it was not altogether surprising when, in April 1915, President Wilson announced his choice of the route connecting Seward and Fairbanks. By adopting this choice, the government agreed to purchase two bankrupt railroads: the Alaska Northern route, north of Seward, and the Tanana Valley Railroad, in the Fairbanks area. 
Seward, as a result of that decision, entered a new period of prosperity. For the next several years, hundreds of workers invaded town as the old Alaska Northern tracks were upgraded and, in places, rerouted. Economic activity remained high until the line was completed in the early 1920s. (Track laying was finished by February 1922, but the line was not open to through traffic until February 1923.) Early in the construction period, in November 1916, the AEC dampened Seward's economic spirits by moving the railroad's headquarters from Seward to Anchorage. Even so, the railroad remained a vital part of town life. Until the advent of World War II, Seward's economy continued to rely on two primary activities: the railroad and the port. 
Last Updated: 26-Oct-2002