At 3:30 in the afternoon of October 18, 1867, the Russian flag was lowered at the Russian American Company's headquarters on Sitka Island. It was an historic ceremony. That day was the last time the Double Eagle would wave over Alaska. Russia had sold her American colony to the USA for 7.2 million dollars.
In the middle of the ceremony something unexpected occurred. As the flag was on its way down it got caught and, despite repeated attempts, wouldn't come loose. A Russian seaman had to climb up the pole and get the flag loose before the ceremony could continue. It was as if the Russian Double Eagle refused to make way for the Star Spangled Banner.
In the large crowd which watched the ceremony there was a young Finlander for whom the takeover had a very special meaning. The new conditions would give him an opportunity the caliber of which comes only once in a lifetime. He was prepared to take the chance and to bet everything on one card.
The handsome young Finlander was named Gustaf Ferdinand Nybom and came from Helsingfors. He had arrived in Alaska as a sixteenyear-old cabin boy on board one of the Russian American Co. ships. He returned home to Finland and passed the master's exam. Back in Alaska he worked first as helmsman but soon advanced to captain on one of the company's ships.
In conjunction with the American takeover of Alaska, the Russian American Co. equipment and properties were sold. Nybom, together with four partners, managed to purchase one of the company's brigs for $4,000. These five partners created a company which was called Hansen, Nybom and Co.
At the end of November the same year, Nybom and other shareholders sailed away in the brig. Their goal was the Pribilof Islands in the northern Pacific Ocean. That which lured them to the distant islands was the possibility of buying up valuable seal skins. This was hardly a safe journey that late in the year. Several days before Christmas they arrived at the main island, St. Paul,
where Nybom went ashore and raised the American flag.
Among the local residents, who were almost entirely made up of Aleuts, those coming ashore were met with deep suspicion. This was occasioned partly by the late time of year, when normally no ships dared fare those waters and partly, of course, because the brig was sailing under the new American flag. Luckily, the Aleuts recognized Nybom from his earlier visits to the
The Pribilof Islands' main importance was derived from the fur seals which found their way there every summer in order to mate. The seals were as valuable a prey as they were easy to catch. A group of hunters consisting of a number of Aleuts chased thousands of the helpless seals to a spot from which they could not escape. There the men chose those animals they wanted to
kill and let the remainder return to the seal colony. The seals were killed by hunters hitting them on the head with long clubs. This method of destruction was very effective. A good hunter could kill a seal with the help of a single welldirected blow.
Nybom and his partners succeeded in buying up 11,000 seal skins over several days on St. Paul. When it was time for the fur buyers to sail away, one of Hansen, Nybom and Co. stockholders, the German, O. Osche, stayed behind in a temporary house they had construeted on the island.
Nybom sailed with the valuable cargo of fur to San Francisco. There the furs were sold to August Wassermann, who was one of the owners of the firm of Hutchinson, Kohl & Co. This firm had bought up the old Russian American Co. warehouses, ships and network of trading stations in Alaska. The owners of Hutchinson, Kohl & Co. wanted Nybom and his partners to join
forces with them. In the preliminary negotiations, Nybom soon emerged as the one to set the tone in Hansen, Nybom & Co. It was proposed that the five partners of the company receive half of the shares in Hutchinson, Kohl & Company if they agreed to a merger. Of those five, it was finally only Nybom who snapped up the offer. The remaining partners of Hansen, Nybom & Co. were
bought out and only Nybom went in with Hutchinson, Kohl & Co. He became one of the company's seven shareholders with one-seventh of the stock.
Competition for Furs
That very same year Nybom took himself back up to the fur islands. This time he was in command on board a steamer which belonged to Hutchinson, Kohl & Co. The journey went via Kodiak and Unalaska. By April they were up to St. Paul. There Nybom and his crew were forced to notice that they were no longer the only ones in the garden patch. Another group of buyers
[Morgan's group] had landed there. They attempted to trick the German left behind into believing that Nybom's brig had sunk during the trip to San Francisco. In that fashion they tried to get him to sell Hansen, Nybom & Co. stocks. When the German refused to sell, they simply drove him out. After that the German had to seek shelter among the Aleuts.
The whole summer the atmosphere was extremely tense between the two groups, and on several occasions there were near altercations.
In the summer season of 1868, Nybom succeeded in buying up 132,000 pelts on St. Paul. Morgan's group, on the other hand, couldn't get more than 34,000 pelts. Such skimpy results on the part of the competition mostly depended on the fact that he didn't have cash to pay for more pelts. On the neighboring island, St. George, another group of buyers had set in motion a lot of
disruption. Nybom managed to clear up the confusion and in addition bought up around 65,000 pelts on the island.
An obvious risk arose out of the large number of buyers on the Pribilof Islands: that the entire seal stock could be wiped out within only a few years. This made the American government step in and protect the seals that very fall.
In October of 1868, Hutchinson, Kohl & Co. was restructured. A new company called Alaska Commercial Co. (ACC) was founded by the former owners reinforced with some of the earlier competitors as well as interests with political clout. The new company bought out all of the Hutchinson, Kohl & Co. assets for $1,729,000. The price signified a substantial profit for the
partners in the old company.
ACC began to carry out an intensive campaign to get authorities in Washington, D.C., to go along with easing up on the protection of seals in the Pribilofs. Their lobbying activities were crowned with success. As early as 1869 the company succeeded in getting permission to buy up a limited number of pelts on the islands. The following year the American Congress passed a resolution to
sell to the highest bidder the right to hunt the Pribilof Island seals for twenty years to come. In addition to the bid itself, the company had to be deemed adequate to handle the business. ACC didn't turn in the highest bid. But in consideration of its suitability, the company won the opportunity to adjust their bid upwards and despite widespread protests were designated to run the fur
exporting from the Pribilof Islands.
According to the contract which was created, ACC got permission to take out 100,000 seal skins from the islands annually. Three-fourths would be taken from St. Paul and the rest from St. George. The company was to pay a fee of $55,000 annually to the government, and $2.625 in taxes per pelt. A tax of 55 cents per gallon was
set on the seal oil which was produced.
According to the contract, ACC was supposed to supply the Aleuts with seal meat as well as 25,000 dried codfish every year. The company was also supposed to give Aleuts firewood as well as barrels for curing the salted seal meat. It was further established that ACC would be responsible for establishing schools for the children eight months per year. The responsibility for
health care as well as care for widows and orphans among the Aleuts was also placed on the company. These were noticeably better conditions than the residents of the Pribilof Islands had earlier. An agent sent out by the American government checked on whether the requirements were fulfilled.
The Largest Fur Company
The monopoly meant that ACC became the world's leading fur trading company in just a few years. Nybom himself estimated that the company had 90 % of the market for sea otter pelts and 75 % of the seal skins. ACC additionally gathered 5,000-6,000 fox furs, 8,000-10,000 beaver pelts, and around 2,000 bear skins annually. The biggest competitor, Hudson's Bay Co. in Canada,
specialized more in the smaller pelts and was also the market leader within that division of the fur business.
ACC had the luck to get in precisely during a period when seal skins rose in value. During the Russian era, when overproduction dominated, the price could reach as low as only $1.00 per pelt. At that time the main market lay in China.
By concentrating on quality before quantity, ACC was suceessful in making the furs attractive to the European market and the price rose to $15.00. All told, ACC took out nearly 2 million seal pelts from the Pribilof Islands during the twenty years the company held the monopoly. The net profit from the fur trade alone during that twenty-year period reached no less than 18 million
dollars, a neat little sum those fourteen stockholders could divide up. ACC turned over 9.7 million dollars during the twenty-year period in payment to the American government. That was a sum which exceeded the purchase price for all of Alaska by $2.5 million. Besides the fur trade, ACC invested in a succession of other business fields. The company thus became the owners of all the
buildings which had earlier belonged to the Russian American Co. ACC based trading posts in all those districts where the Russian company had earlier been active. In addition, they established several dozen new ones. At its' largest, ACC's network included 91 units, of which two were located on the Russian side of the Bering Sea. ACC had no monopoly on ordinary trade but had to withstand
intense competition from other companies in many areas. When ACC's 20-year contract on the Pribilof Islands ran out, it was generally assumed that the company would get to renew it for an additional 20 years. But that was not the case. Their competitor, North American Commercial Co., had a bid a shade higher, and this time the decisionmakers didn't assess the eligibility of the bidder.
There was grousing too that politicians inimical to the company had leaked the size of ACC's bid. Nevertheless, ACC had their trading fleet left, a number of plants for canning salmon, and the extensive network of trading stations throughout Alaska.
Through selective hunting during the period of their contract, ACC had succeeded in getting the seal stock to replenish itself. But their successors were not so farsighted. When the second contract ran out in 1910, the seal stock had been catastrophically decimated. Contributing to the heavy decline was widespread pelagic sealing, that which occurred out at sea. During
the period when the seals migrated between California's coast and the Pribilof Islands, this was an easy job for hunters aboard smaller boats. The hunt was illegal, but the American Navy could not possibly guard the whole enormous ocean.
The worst thing about pelagic sealing was that it wasn't selective. That meant that for every female which was killed out at sea, her living and her still unborn kids were destroved as well. As a result, a large loss of injured animals occurred which fled and were not taken care of by the sealers. It was estimated that only one of ten dead seals could be gotten on board
the vessels out at sea.
One of the most successful pelagic sealers was moreover a countryman of Nybom's. His name was Viktor Jakobson, and he originally came from Killingholmen outside of Jakobstad.
Took a German Name
In time Gustav Nybom began to call himself Gustave Niebaum. The reason he chose the German form of his name is not clear. Most of his partners were however German Jews, and after the change of name he was often taken to be one too. The German image was further strengthened when he married German-American Susan Shingleberger in 1873.
Niebaum planned to build a ship for himself in which the two of them would sail to distant parts of the earth. The problem was that Susan didn't share the old salt's warm feelings for the sea at all.
In the search for an area of interest in which they both could share, Niebaum's attention was directed to the vineyards of Napa Valley. In that fertile valley a few dozen kilometers north of San Francisco, wine had been very successfully marketed commercially since the 1860s. A couple of Niebaum's partners had already settled on vineyards.
When the Niebaum couple visited those vineyards, they were also taken with the beauty of the valley. After having carefully researched market conditions, Niebaum bought the Inglenook Winery in Rutherford in 1879.
Together with a number of adjacent plots which were also purchased, the farm consisted of 450 acres of California's finest grape-growing fields.
Niebaum's ambition was to raise the quality of California wines. He utilized his enormous wealth to import the best grapevines from Europe. He also succeeded in employing eminent experts in wine production.
The contacts with the European wine growers were made easier because Niebaum was a remarkable linguist. It has been reported that he had mastered no less than seven languages and, out of these, spoke five perfectly. Niebaum had a standing order with a book dealer in Frankfurt to obtain all old and new wine literature in whatever language it might be. Over the years he
thus gathered a library containing 600 volumes. During trips to Europe on Alaska Commercial Company's (ACC) business, he would also acquaint himself with the production of wine, so foreign to him as a Finlander.
At this time the California wines had an especially poor reputation. Most of the wines were transported in barrels to the east coast of America. There the wines were taken in hand by unscrupulous businessmen who often blended them out in such a way that they gave the greatest profit in the short run. It might also happen that those bottles into which the wines were tapped
had a false French label.
Naturally, Niebaum couldn't accept that kind of treatment for Inglenook's quality wines. Inglenook began to tap its wines in its own bottle, the first Californian vineyard to do so. Niebaum even forbid the Inglenook wines to be served other than out of the farm's bottles. He quickly perceived the need of some form of quality control over the California wines. For an extra
tax, he got the authorities to officially certify that the bottles contained wine and nothing else. The Finlander's good economic position also made it possible for him to store wines for several years, something which at that time was unusual in California.
Niebaum also attempted to influence his Californian colleagues not to send out inferior wines onto the market but instead to use these for the production of brandy. His argument was that a load of poor wine from California could do more damage to the economy than two good loads could help.
It didn't take long before Niebaum began to harvest the successes from his investments in quality wines. At the 1889 World's Fair in Paris several of Inglenook's wines received prizes. Those honors would come to be followed by many more. Niebaum didn't see Inglenook as some isolated business activity. Wine production was his personal
hobby. Despite the high costs of developing quality, the vineyard became an economic success. Niebaum's investment in quantity also contributed to that success. During the years 1884-1887 he had a large stone building constructed for the warehousing of the wine barrels. The building, which was a stately creation in half-Gothic style, held a warehouse's capacity of 112 million gallons.
The building still exists today and, like all of Inglenook, it is open for tourists who stop by in order to get a free taste of the vineyard's wines.
In the large warehouse Niebaum designed an elegant tasting room shaped like a ship's cabin. The window with squares of colored leaded glass created in the 17th century in Holland gave a special warm charm to the room, which was decorated with antiques and art work from Europe. In the lovely tasting room, Niebaum often gathered his friends around him for happy parties.
Apparently Niebaum was gifted with a very welldeveloped intelligence in general and a mind for business in particular.
In private he was characterized by strikingly reserved behavior. For example, he never allowed any newspaper interviews. From his time in Alaska, a story was told about how an Englishman once came into a saloon and bragged high and low about having successfully explored one of Alaska's rivers, getting nearer the source than any other white man before him. After the
Englishman was gone, Niebaum, who had calmly listened to the blustering, commented that the Englishman had certainly described the river in question accurately. Niebaum himself had gone up along it several years earlier. Besides that, he had gone more than 200 kilometers farther up along the river than the Englishman. As soon as the braggart had calmed down, he would hear about it.
During his period as a wine merchant in the Napa Valley, it was a common sight to see Niebaum himself participating in the daily work. It was said that Inglenook once had a visit from a stranger. The visitor ran into a sloppily-clad man, who he assumed was a foreman. The visitor asked the man to show him around the vineyard. The worker went along with it and gave the
visitor a guided tour during which he gave detailed information about the unbelievably extensive work which had been invested in the farm. After the tour ended, the guest pressed a dollar into the hand of guide. When they were about to part, the guest asked who the jackass was who had done all this. "A foreigner by the name of Niebaum", answered the worker evasively. When the
visitor rode away, he still had no idea that the sloppily-clad guide and the vineyard's jackass of an owner were one and the same person.
The investment in the vineyard in the Napa Valley kept Niebaum from spending as much time on ACC as earlier. But he made regular visits to the company's head offices at 310 Sansome Street in San Francisco. There he often spent the time together with business acquaintances, friends and the captains from the company's ships. During the long conversations which took place,
they exchanged experiences from the journeys through the North. At this time Niebaum, together with Lewis Gerstle and Louis Sloss, completed the troika which directed the company. In time Niebaum extended his share of the stock in ACC, the profits from which made its owners multimillionaires. In the middle of the 1880s he himself used the title "general manager".
When the Niebaum couple constructed a home for themselves at the Inglenook vineyard, they had no need to consider the costs. Material as well as craftsmen were brought over from Europe. The hallmark of the stately home was a gigantic veranda which went around the entire building.
The Niebaums never had any children of their own. When Susan's brother and his wife were lost to an epidemic, it was only natural that the Niebaums adopted the children of the dead couple.
Niebaum's days ended in San Francisco August 5, 1908. In the beginning of the same year, he had stepped into the position as president of the Alaska Commercial Company. Upon his death he belonged to the group of America's richest men. He had then realized the American dream. As a cabin boy he had come to Alaska, recognized the opportunity, and in the crucial moment bet
everything on one card. He had won the hand and made the most of his talents.
The estate he left at his death went first to his widow, Susan Niebaum. After her passing in 1936, the house and vineyard went to the children of their adopted daughter. They took care of the vineyard and developed it still further up until 1964. Niebaum's stately home was purchased in 1975 by the world famous film director Francis Ford Coppola. A small portion of the old
vineyard went with it, but not Inglenook itself.
The Coppolas today produce a high-quality wine at the farm which is sold under the brand name of Niebaum/Coppola.On the wine label you can admire Niebaum's stately home. The annual production at the vineyard is approximately 5,000 cases.
Inglenook itself was purehased in 1964 by United Vintners. The company was bought out in turn by Alcoholic Beverages of Heublein, Inc. in 1969, one of the world's largest producers of alcoholic beverages. Inglenook has replied to Coppola's brand competition by beginning to create a wine series which goes by the name of "The Gustave Niebaum Collection."