The Alaska statehood campaign that culminated 50 years ago this month manifested a long-standing interest in and support for Alaska by the federal government, a fact somewhat at odds with the notion of Alaska as independent and exceptional.
Statehood certainly did provide Alaskans much greater control over their own affairs. No longer did federal bureaucrats handle most of Alaskans' official internal matters. Additionally, Alaskans now had a governor they selected themselves, not one chosen mainly by the senators from Washington state. Also, Alaska's Congressional delegate was legitimized by being able to vote in the House, and perhaps most remarkable, for the first time Alaskans had their own two U.S. senators.
Some thought it absurd that Alaska, the least populated of all the states with 228,000 residents, should have two Senators. But Nevada (288,000) and Wyoming (322,000) were almost as small. And when the Constitution was adopted in 1787, nine of the original thirteen states had populations less than 228,000.
Of much greater concern during the campaign was whether Alaska would be able to pay its own way. Repeatedly, senators and congressmen expressed skepticism that Alaska's population was sufficient to provide the tax revenue necessary to fund a state government.
They were right to be worried. Then, as now, Alaska's economy was very narrow, based on natural resource development, and heavily supported by federal spending. The potential tax revenue from the small population seemed just too insufficient. It was not inappropriate for the federal government to provide significant spending to carry a territory, but it seemed a contradiction of the core concept of statehood for the federal government to fund a substantial portion of a state economy.
Some Alaskans also were concerned. Statehood advocates argued that statehood would bring new investment, which would create jobs, which would bring new population. But as the brilliant economist George Rogers pointed out in his 1962 book "The Future of Alaska," they had no real plan for how this was to happen. Statehood would not create new resources, nor would it suddenly make profitable the development of existing resources which had been unprofitable before statehood. There was magic in statehood, to be sure, but not that kind of magic.
Oil had been discovered on the Kenai Peninsula in 1957; that was helpful. But the deposits were small by industry standards, and not big enough when their production was taxed to pay for statehood, though they did have the positive effect of encouraging the oil companies to continue exploring.
Global tensions were high in 1958, the U.S. and Russia deep into the Cold War, and Alaska's location made it geopolitically significant. Air forces trained for nuclear strikes, while ground radar and air defense units anticipated Soviet air attacks. Federal spending, most of it military, comprised the bulk of Alaska's economy. But the revenue from taxable sources in the territory was pitifully small. Accepting the most effective argument for statehood, the moral argument that Alaskans should be as self-governing as any other Americans, Congress then had to find a way for Alaska to support a state government.
Their answer they devised was to increase dramatically a formula already used in some other states. Congressional leaders wrote into the statehood bill a provision that 90 percent of federal mineral lease revenue generated in Alaska would be given to the state. "Minerals" included coal, oil and natural gas. In other states, as much as 37.5 percent of such revenue was given to the state where the federal leases were sold; the 90 percent for Alaska was unprecedented. Thus, whenever mineral leases were sold on federal land in Alaska, 90 percent of the revenue would go to the Alaska state treasury. It still does.
Satisfied they had now provided for the new state's likely budget shortfalls, Congress passed the statehood bill, creating the State of Alaska. We were in!
Few understood that even this boost would not be enough, and no one foresaw the fiscal salvation represented by Prudhoe Bay oil. Without the 90 percent provision, though, it is unlikely that advocates would have gained statehood. Continuing the generous support it had provided throughout the territorial period, Congress went a long way also toward carrying Alaska into the statehood era.
Steve Haycox is a professor of history at the University of Alaska Anchorage.
Steve Haycox
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