Guard Island Lighthouse

In early July 1897, gold was discovered in Rabbit Creek near Dawson City in the Yukon. A few weeks later, several grubstake miners arrived in Seattle and San Francisco, showing off their bags of gold. One nugget was said to be the size of a walnut! The Klondike Gold Rush began, sending a shockwave of excitement around the world. The "Panic of 1893" and the subsequent "Panic of 1896" had sent the United States plummeting into the throes of a recession, with serious bank failures, high unemployment, and businesses out of money.

In 1867, the United States acquired the territory of Alaska for $7,200,000 (about 2 cents an acre) - a huge bargain. Two years after the acquisition, the Senate called for a review of the safety of the Pacific Northwest coasts, requiring the President to, "... detail an office to select from public lands such prominent points on the coasts of Oregon, Washington Territory, and Alaska...in his judgment may be necessary for lighthouse purposes, in view of the future commercial necessity of the Pacific coasts and to reserve the same for the exclusive use of the United States."