The 1912 law establishing Alaska's first legislature also called for a railroad study to help develop Alaska and its resources. In 1913, President Woodrow Wilson said a government-built railroad would be a key to unlocking Alaska's resources and opening its future.
In early 1914, Wickersham delivered a five-and-a-half-hour speech in Congress advocating the construction of a government rail line in Alaska. Later that year, Congress authorized a government-built Alaska railroad. The president was to select one or more routes from ice-free ports to Interior Alaska. Construction could include 1,000 miles of track. Costs could not exceed $35 million.
The railroad's approval prompted celebrations in Alaska towns where residents imagined a new golden era. In Fairbanks, the Lipman Simson clothing store advertised that the railroad would allow quick shipments of the latest fashions from the East Coast: "It will not be so long now before we will be able to get this eight-day express service."
In April 1915, President Wilson announced his choice of a route. The railroad would start in Seward. From there, it would go through the Susitna River valley and cross the Alaska Range at Broad Pass, then turn east to follow the Nenana and Tanana Rivers to Fairbanks. One reason this route was selected was the hope for the long-range benefit of opening the Matanuska and Susitna river valleys for agriculture and the coal resources there.
The railway would take nine years to complete. President Warren G. Harding traveled to Alaska to tap the $600 golden spike outside of Nenana. The Alaska Railroad was the most expensive federal project during the territorial days, a project which by the late 1930s represented an investment of more than $10,000 per person for the 7,000 residents who lived in towns along the railroad. It was the only rail line run by the federal government in the United States.
The Alaska Railroad was not a financial success. By 1925, its expenses exceeded revenues by nearly $1.8 million. Economy measures reduced this to just under a one-million-dollar deficit, but losses continued. There was adequate business northbound carrying supplies and mining equipment from the port at Seward into Interior Alaska, but there was little to be carried southbound on return trips.
Despite the financial losses, the Alaska Railroad was important in the development of the territory. It helped support large-scale gold mining in the Interior and rebuild the region after a decline during World War I. It also created many of today's communities. Anchorage was founded as the main southern railroad construction camp. Seward grew as a town as the port for the railroad. Nenana was the main construction camp for the northern section of the railroad. The railroad surveyed townsites and sold lots at Anchorage, Nenana, Wasilla, and Talkeetna.
1915 photo of Anchorage's beginnings as a railroad construction camp
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