Pacific Steel Barge Company and the whaleback City of Everett (Part 1)

  • By Denise Ohio
  • Posted 1/21/2021
  • Essay 21163
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From 1888 to 1893, as the Great Northern Railway made its way west to Puget Sound, speculators flocked to the region anticipating fortunes to be made in land, mining, and timber. Among them were a handful of railroad-connected financiers -- sons of wealth and social connection known for their friendships with John D. Rockefeller -- who teamed up with a Midwesterner living in Tacoma to create a new city near the mouth of the Snohomish River. The group platted a town, slapping their own names on as-yet unbuilt streets, and began to entice industries to expand to their piece of the frontier. They managed to start four new industries including a shipyard. Incorporated on September 28, 1891, the Pacific Steel Barge Company, an offshoot of the American Steel Barge Company of West Superior, Wisconsin, would build a single ship, an oceangoing whaleback named after its home port, the City of Everett.

A New City on Puget Sound

From 1888 to 1893, as James J. Hill's Great Northern Railway made its way west from St. Paul, Minnesota, to Puget Sound, speculators flocked to the region anticipating fortunes to be made in land, mining, and timber. On a peninsula at the mouth of the Snohomish River, a group of railroad-connected financiers teamed up with a Midwesterner living in Tacoma to create a new city in a new way. Instead of founding a town and hoping businesses would appear, these men decided to establish industries before auctioning off lots in the new town, profiting both from the industrial activity and by selling land they had purchased low and sold high.

While the group failed to convince industrial giants to build in their new city of Everett, they did manage to start four new industries: a smelter to serve their nearby mining interests, a wire nail works that they also owned, a paper mill in which they had an interest, and their own shipyard. Incorporated on September 28, 1891, the Pacific Steel Barge Company was created to build oceangoing whaleback ships to serve Pacific coastal trade and Asian markets as part of a base the founders of Everett believed would become the major industrial center in the Pacific Northwest. The founders also believed it would entice Hill's railroad to their new city.

The Pacific Steel Barge Company was an offshoot of the American Steel Barge Company of West Superior, Wisconsin. The same men who controlled the Everett operation were in control of the Wisconsin operation, and money from John D. Rockefeller (1839-1937), which powered the American Steel Barge Company, would also back the Pacific Steel Barge Company.

The Everett barge works was to build ships called "whalebacks," an innovative design invented by Captain Alexander McDougall (1845-1923). The whaleback design promised ships that would move cargo more quickly, but the lack of customers for the ships, plus the poor management of the companies, the Panic of 1893, and the eventual takeover by Rockefeller interests of key Everett businesses, doomed the Everett barge works. The Pacific Steel Barge Company would build a single whaleback, the City of Everett, before shutting down.

That ship, however, would have a long and remarkable history.

Birth of the American Steel Barge Company

Alexander McDougall was born in 1845 in Port Ellen on the Island of Islay, Scotland. His family immigrated in 1854, settling in the village of Nottawa in the vicinity of Collingwood, Ontario, a town on Georgian Bay (McDougall, 4-5). After his father was killed in a mill accident in 1855, McDougall became responsible for helping to provide for his family at the age of 10 (Dictionary of American Biography, 22-23). At 16, he apprenticed with a blacksmith, and in July 1861, he ran away by shipping out as a deckhand. He spent the next 21 years on Great Lakes ships "as a deckhand, porter, second mate, mate and pilot, and then captain," he wrote in his autobiography (McDougall, 9). In the early 1880s, as master of the steamship Hiawatha and towing the Minnehaha through gales, McDougall conceived an innovative new ship design. He filed his first patent for the "whaleback" vessel, which was granted on May 24, 1881 (Blue Book of American Shipping, 193).

McDougall's design had a cheap- and easy-to-build steel hull with a convex top, straight sides, a conical bow, and a flat bottom -- imagine an uppercase D with the flat part of the letter facing down. While the deck had turrets, when fully loaded, most of the ship lay was submerged, with the top deck only 6 feet above the water, minimizing friction and letting the ship travel heavy seas without reducing speed. McDougall's design also meant the ship was self-trimming. When a conventional steamship was loaded with cargo such as coal or grain, trimmers had to hand-shovel the loose material into all the space in the holds or it would settle unevenly and shift when underway. At minimum this shifting could make for an uncomfortable trip; at worst, it could cause a ship to roll over. In McDougall's whalebacks, cargo settled evenly, making trimming unnecessary.

Whalebacks had steel hatches. Before this, hatches were made of wood and covered by canvas to be made watertight. In bad weather heavy wooden beams called "battens" were placed over the hatches to keep them in place. McDougall's steel hatches eliminated the need for battens, though the hatches would prove problematic in other ways.

When no investors stepped forward to finance the first barge, McDougall continued building his shipyard and stevedoring business. Almost seven years later, he spent his own money to build the first whaleback barge, Barge 101. He wrote that when it slid into the water at its launch on June 23, 1888, his wife, Emmeline E. Ross (1851-1908), muttered, "There goes our last dollar" (McDougall, 83). Barge 101 yawed so wildly when towed it smashed into a rock. McDougall's associate, Robert Clark, redesigned the conical sections and had them rebuilt. The rebuilt Barge 101 operated well enough that it was used to take on a bulk load of 1,200 tons of iron ore in Duluth, Minnesota, bound for Cleveland, Ohio. One researcher would later claim Barge 101 completed nine trips before Great Lakes shipping season closed in November 1888 (Pellett, 28-31).

Though McDougall received the congratulations of investors, he had trouble getting their money. McDougall wrote, "[A]ll I could get was sympathy. So I took my model to Colgate Hoyt, New York, an associate of John D. Rockefeller, who had much lake ore to move, and I told him of my patents and plans; also of my past experience, which he carefully investigated"(McDougall, 32-33).

Colgate Hoyt (1849-1922) and brothers Charles L. Colby (1839-1896) and Joseph L. Colby (1846-1920), partners in Colby, Hoyt & Company, performed their due diligence, consulting Captain Thomas Wilson and Pickands Mather & Company, both Great Lakes ship builders and managers, about Barge 101. They researched McDougall's patents and hired a professional naval architect to review the whaleback's design. The Colby-Hoyt syndicate was satisfied with what it saw. In a letter dated December 5, 1888, Joseph Colby wrote to Charles W. Wetmore of the New York law firm Barlow & Wetmore: "I don't think after seeing Captain McDougall you will need to consult any of your yachting friends. The performance of the boat already seems to satisfy everyone here that she is seaworthy" (Pellett, 28).

Soon Hoyt and McDougall had a contract establishing the American Steel Barge Company on December 12, 1888. McDougall received stock and $25,000 for his patents with an additional $15,000 for his barge-building equipment. The American Steel Barge Company was then incorporated on January 3, 1889, with Charles L. and Joseph L. Colby, Charles W. Wetmore, Alexander McDougall, John D. Rockefeller, and others as investors. Colgate Hoyt was elected president and treasurer, Joseph Colby was elected first vice president, and Charles W. Wetmore second vice president. McDougall was elected general superintendent of construction -- in other words, the manager who made sure the ships got built.

From 1889 to 1898, the American Steel Barge Company would build more than 40 whalebacks, and in 1890 built their first whaleback steamship, the Colgate Hoyt.

Into the Pacific Northwest

As trustees of the Wisconsin Central Railroad and directors of the Northern Pacific Railroad, Charles Colby and Colgate Hoyt were able to tap the resources of those entities. But they primarily used their personal connections with John D. Rockefeller for financing. Rockefeller's millions and his name were behind the American Steel Barge Company as well as most of the other Colby-Hoyt syndicate projects. Rockefeller, busy with Standard Oil, did not have the time to manage his wealth. He deferred to these two friends, both of whom were fellow congregants at Fifth Avenue Baptist Church in New York. Hoyt often dropped by Rockefeller's home in the morning and accompanied him downtown, touting stocks all the while. Rockefeller poured money into a score of companies, building an investment empire he knew only from his friends' enthusiasm and misleading figures on statements (Chernow, 1281).

In addition to their Midwest business interests, Colby and Hoyt pushed Rockefeller to invest in Pacific Northwest timber. Neither Colby nor Hoyt had spent any time in the Puget Sound region, but they would have known that the Northern Pacific had a presence in Snohomish County. A Northern Pacific real estate entity, the Lake Superior and Puget Sound Land Company, was on the 1888 list of the county's heaviest taxpayers. Colgate Hoyt was also a major shareholder in the Puget Sound & Alaska Steamship Company.

At that time, Rockefeller was particularly vulnerable to their pitches. In early 1889, Rockefeller had complained of fatigue and depression, and in 1890 he stayed away from his New York office for several months due to an unspecified illness. But that didn't spare him from the syndicate's maneuvering. Not only did Hoyt and Colby exploit Rockefeller to the benefit of their business interests on the Great Lakes, they introduced Atlantic coast whaleback service to move iron ore from their mines in Cuba, and set in operation their expansion into Pacific coast shipping.

But although the Rockefeller backing was crucial, Colby and Hoyt's planned expansion to the Pacific would require more than just money. They needed specific expertise.

In his autobiography, McDougall took credit for the location of the Everett townsite when he casually told Colgate Hoyt that Seattle and Tacoma were not the right places for a shipyard. Those cities were built for sawmills and the timber industry, not for a port. In addition, there was a huge disadvantage for those sites: the teredo -- a small, wormlike, saltwater clam that bores through wood. Fourteen-foot tidal changes meant most Puget Sound ports had to build massive docks on large, expensive, wooden pilings, and the teredo meant those structures had to be replaced frequently. But this wasn't a problem at Everett: The Snohomish River emptied fresh water into Port Gardner Bay, making it uninhabitable for the species.

Those listening gave McDougall some maps and charts and told him to pick out a site. McDougall chose the mouth of the Snohomish River as a first choice, suggesting the new town be named "Rockefeller." He sent two of his shipyard men, Ed Patterson and William Ross, McDougall's brother-in-law, to camp in the area for several months to watch the tides and currents and take soundings. When the reports were positive, McDougall traveled to the coast to see for himself. Low tide was at night in January so McDougall walked the tidal flats with a lantern. His reports were positive and the financiers summoned him to New York on a special train, adopted his report, and sent out agents to buy land. He claimed this all happened about the same time Nellie Bly completed her round-the-world trip on January 25, 1890 (McDougall, 43).

In addition to McDougall's shipping experience, Colby and Hoyt would need local help, preferably someone they knew and who was involved in business activities in the area -- someone like Henry Hewitt Jr.

Henry Hewitt Jr. (1840-1918) was born at Gisborn, Yorkshire, England, October 22, 1840, the second of eight children of Henry (1814-1897) and Mary Proctor Hewitt (1815-1854). His father, a farmer, migrated to Racine, Wisconsin, in 1840, and then moved the family to Chicago. At the age of 16, Hewitt worked for his father as timekeeper, then he and his father went into contracting, lumber, and banking. By the time Hewitt was 36, he was cashier of the First National Bank of Menasha and had an interest in a paper mill, a pail factory, and several barrel factories. He also owned more than 80,000 acres of timberland in Wisconsin and Michigan. It is likely Henry Hewitt Jr. bought some of those acres from the Wisconsin Central.

The Wisconsin Central Railroad Company had been established on February 4, 1871, with Gardner Colby, Charles and Joseph Colby's father, and others as principals, and was initially granted 837,000 acres of government land. The Wisconsin Central would eventually be granted 2,387,000 acres of land along the proposed route from Menasha, Hewitt's hometown, to Ashland and Superior, Wisconsin. In 1874, Charles Colby was elected vice president of the railroad and, at the request of his father, left New York for Wisconsin, to devote himself entirely to railroad and mining interests. When Gardner Colby resigned because of ill health, Charles Colby took over as president of the Wisconsin Central.

On June 17, 1887, Colby, Hoyt, and attorney Edwin H. Abbot (1834-1927) formed the Wisconsin Central Company, gaining complete control of the railroad and other properties as trustees. All indications suggested that the Wisconsin Central would soon become part of the Northern Pacific. On September 4, 1887, Colby, Abbot, and Hoyt further cemented their relationship with the Northern Pacific by joining the board of directors, while still retaining control of the Wisconsin Central Company. 

Less than a year later in May 1888, newspapers reported that Hewitt had purchased $1.5 million of timber in the Washington Territory. He and his partners incorporated the St. Paul & Tacoma Lumber Company on June 4, 1888, and Hewitt moved his family to Tacoma soon after. The lumber company's purchase of 80,000 acres of timberland from the Northern Pacific was the largest in the nineteenth century. It was said that Hewitt had acquired more pine forest land than anyone in the world except the czar of Russia.

Building a Shipyard -- and a Town to Put it In

On March 19, 1890, Colby resigned as president and director of the Wisconsin Central. Hoyt also resigned from the board of the Wisconsin Central. Each was still involved in the Northern Pacific, but it appeared both men were looking to move on to an exciting new project in Western Washington. Charles Colby arrived in Tacoma with family and business associates in the two Colby private railcars. When asked, Colby denied he was in the region in the interest of a projected railroad, saying, "There's nothing in it. I am out here for fun" ("On a Pleasure Trip"). But that wasn't quite true.

The Colby party met with Hewitt, and on July 17, 1890, set off on a two-week trip up the Inland Passage on the Queen of the Pacific. According to William Whitfield's History of Snohomish County, Washington, "[The Colby-Hoyt syndicate] had about completed arrangements with the citizens of Anacortes for the location of a [shipyard] there, but Hewitt took advantage of an invitation to accompany them on a trip to Alaska, to argue the advantages of his newly discovered townsite" (Whitfield, 313). This doesn't sound quite right. Colby, whatever his faults, would not have invited Hewitt had he and Hoyt not already made a decision about the site. And it appears that someone made clear, at least to Hewitt, that Colby and Hoyt were looking beyond a shipyard. In September 1890, Hewitt was instructed by the Colby-Hoyt syndicate to buy up all the land in the vicinity of Port Gardner Bay without limit on price or quantity (Cameron, et al., 103).

The Colby-Hoyt syndicate, through its middlemen including Hewitt and McDougall, let everyone know that it was still considering many sites for a Pacific shipyard, including San Francisco, Seattle, Fairhaven, Port Orchard, and Anacortes. They even steered people away from Port Gardner. One early report said that the American Steel Barge Company was about to close with Anacortes for a million dollars (Whitfield, 317). But all of this was a blind. Their project was already planned, partially financed, and named "Everett," after Colby's son, flattering Colby while not giving away information about the new city to speculators.

On November 19, 1890, the Everett Land Company was incorporated by Hewitt, Walter Oakes, president of the Northern Pacific, and New York attorney George S. Brown, representing the Colby-Hoyt syndicate. Hewitt was elected president, Charles W. Wetmore vice president and secretary, Gardner Colby (either half-brother or nephew of Charles and Joseph Colby) treasurer, and George S. Brown, assistant secretary.

McDougall returned to Everett to locate the site for the new shipyard. Newspapers reported that he and his wife, Emmeline, and Mr. and Mrs. Thomas Wilson were also traveling from Tacoma to Seattle, Victoria, Nanaimo, Port Orchard, Port Gardner, San Francisco, and San Diego, before returning to Tacoma and heading back east on a factfinding mission regarding Pacific coast shipping. Meanwhile, Stephen Knowlton, Colby's brother-in-law, and William Ross arrived to superintend the building of the barge works.

On March 21, 1891, the Great Northern Railroad's route to Puget Sound was announced and just as the smart money had guessed, it was heading for Everett. In late May, Hewitt brought a group of real estate and railroad men to the area to entice investment and returned again in July with members of the Armour family of the Armour Packing Company. It doesn't appear any of these industrialists or financiers made a commitment to build in Everett.

On Wednesday morning, September 16, 1891, the building of the Pacific Steel Barge Company began, on land purchased from the Colby-Hoyt syndicate, when 40 men began pile-driving operations. Articles of incorporation were filed on September 28, 1891, with capital of $600,000. The board included Hoyt, Wetmore, McDougall, T. H. Brownell, I. B. S. Isled, George H. Ballou, and George S. Brown.

Back east, the American Steel Barge Company sent the whaleback steamship, the Charles W. Wetmore, to the Atlantic in 1891. The Charles W. Wetmore sailed across the Atlantic to Liverpool, and back to New York, Wilmington, and Philadelphia to pick up freight for Everett: desks for the school, a pulpit for the church, two sawmills, tools for the shipyard, paper mill machinery, nail factory machinery, and various materials for small manufacturing plants (McDougall, 111-112). The Charles W. Wetmore left Philadelphia on September 18 and reached Montevideo, Uruguay, on October 19. McDougall received a telegram on November 7 informing him the whaleback had reached Valparaiso, Chile, two days ahead of time, and was expected to reach Everett on December 10.

On November 20, 1891, Mr. and Mrs. Charles Colby, Hoyt, and others arrived in Seattle from a trip around the Sound. Hoyt told reporters: "We have had a delightful time. I had never before been through that part of this country, and I was greatly pleased with all I saw. We visited Anacortes on Thursday and spent today at Everett. On Saturday we shall visit Lake Washington and return to spend Sunday at Everett. After that we make our way on down to California. While at Everett we fixed-upon a site for the steel barge works. We want fresh water and so the site selected is on the Snohomish river ... I had never before visited Everett, but I am much pleased with the townsite, which is certainly a beautiful one. ("Barge Works Site")

On their return to New York, Colby told the Wall Street Journal, "I am very much pleased with all I have seen on the Northern Pacific railroad from one end of it to the other. I have never felt as bullish in regard to the property as I feel to-day" ("The Great Northwest").

McDougall arrived in Everett on December 2, 1891, with G. J. Anderson, who had built the American Steel Barge Company plant, expecting to meet the Charles W. Wetmore. But the whaleback didn't arrive until December 21. The whaleback had lost its rudder in a heavy fog and had to be towed into Astoria, Oregon, by the SS Zambezi. Though the initial salvage claim was $200,000, the final judgment totaled $35,991.08, which was put on the Pacific Steel Barge Company's books.

After unloading some of the cargo for Everett, the Charles W. Wetmore sailed south with 1,500 kegs of nails for Seattle and 150 tons of six-inch water pipe for Tacoma. The ship returned in early January, traveling eight miles up the Snohomish River to make landing. The Charles W. Wetmore was also transferred to the Pacific Steel Barge Company's books for $200,000, though the ship originally cost only $131,800. The American Steel Barge Company netted a paper profit of $68,200, but like most paper profits, this had no real effect on the parent company's cash position. Still, the Pacific Steel Barge Company had a ship, and the Charles W. Wetmore set out as a collier. Unfortunately, on September 8, 1892, the Charles W. Wetmore ran aground near Coos Bay, Oregon, and was declared a total loss.

Trouble in Paradise, or "Rockefeller is Onto You"

At the same time, things were not going well with Rockefeller in New York. In March 1891, at the age of 52, he had summoned Frederick T. Gates to help with his investments. Gates was about to embark on a tour of Baptist schools in Alabama when Rockefeller asked if he would inspect an iron furnace he had bought on a friend's advice. The operation had fallen into a receiver's hands, and Rockefeller wanted to know why. Gates found that the investment had nothing to do with iron but was an attempt to boom local real estate. That was not the only fraud he found. In Gates' memoir, Chapters in My Life, he described about 20 sick and dying corporations that were bleeding Rockefeller money, many of them controlled by the Colby-Hoyt syndicate (Gates, 168). He accused Hoyt and Colby of buying land, announcing a Rockefeller-connected project, and then selling when land prices skyrocketed. They also had a practice of bailing out of their investments in these projects, leaving Rockefeller with a majority stake in worthless companies.

It wasn't Gates' practice to let Rockefeller-connected interests go into bankruptcy. Gates knew that to protect Rockefeller's interests and reputation, he had to force out those involved in the American Steel Barge Company's upper management while keeping those who brought value, such as Alexander McDougall.

In 1890, McDougall and his workers at the American Steel Barge Company had built five additional barges and the first whaleback steamship. In 1891, McDougall moved the American Steel Barge Company from Duluth to Howard's Pocket at West Superior, Wisconsin, where the company would build 15 more whaleback steamships and 19 barges between 1891 and 1898. The West Superior operation struggled, but it had assets, skilled personnel, and the benefit of geography -- the Great Lakes region was poised for explosive economic growth and ships would be in demand.

But while Pacific Steel Barge Company also had skilled personnel, it had paper assets and sat at the edge of the frontier without easy access to the steel needed for its ships. While work moved forward to complete the shipyard and build its first whaleback steamship, the barge works was operating on borrowed time.

Next: Part 2 -- Yet Somehow a Ship Got Built


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