The banana, a fruit common in the republics of the tropical isthmus south of Mexico, was not well known in the United States or Europe until the late nineteenth century. In the 1890s, a few, well-funded entrepreneurs found that they could reap enormous profits, using dirt cheap Honduran and Guatemalan labor to harvest and load bananas on ships for this entirely new market. The men who developed this trade formed political alliances with key elites in the region taking government out of the equation in distribution of profits. This experience gave rise to the phrase “banana republic” to describe a form of government dominated by a few private corporations.
The Territory of Alaska had equivalent experiences, first with the great copper and gold mining enterprises of the Guggenheim trust and then with domination by the canned salmon industry. At the constitutional convention, Bob Bartlett, a key figure in the statehood movement and later U.S. senator, famously warned the delegates against letting a repetition occur in the infant state.
The power of the Guggenheim trust kept labor costs low. Safety was not a priority. The convention chair, later Alaska’s first governor, Bill Egan, lost his father in a preventable accident. All profits left Alaska with the ore.
The canned salmon industry supported a sufficient number of territorial legislators to assure that nothing passed against its interest. It was said in the early statehood years, perhaps apocryphally, that territorial legislators looked to the gallery when any vote came up to see whether “Fish Arnold,” canned salmon’s representative, had his thumb turned up or down.
The 1967 Prudhoe Bay discoveries were greeted with enthusiasm and relief. Opposition to statehood had been grounded in the argument that Alaska was too poor to maintain the essential services required for its vast area. The earlier discoveries in 1962 on the Kenai Peninsula offered some promise to the new state that money would be available to supplement the state income tax, measured as 10 percent of the federal, then the largest source of funds for the new state. But Prudhoe Bay assured the success of statehood and required Alaskans to take their first real look at a fair state share, conscious of industry resistance and the risk of becoming an oiled banana republic. Bill Egan and the Republican governor with whom he joisted for office, Wally Hickel, both grew up in the atmosphere of concern for corporate domination.
Egan, in the early seventies, had to fight for Alaska’s long-term interest in the context of tension between a public demanding that revenue concerns be swept aside so the pipeline and its construction jobs would begin and his own concern that the state retain a “fair share” of the oil revenue.
The tax negotiations came to a head in 1973. Big Oil obviously “owned” a block of legislators. Two leading Republicans, House Speaker Tom Fink and Sen. Cliff Groh, among others, were not. They led their party in a bipartisan legislative endorsement of a “fair share” negotiated by Egan against oil companies arguing for lower taxes. The compromise was endorsed in a special session that summer.
What is most remarkable about the oil tax reduction bill passed last year is that no comparable hard-bargaining between Big Oil and the administration occurred. In a political accident, Gov. Palin’s resignation, state leadership went to Lieutenant Governor Sean Parnell, formerly an oil company lobbyist. Reelected, Parnell has blurred the distinction between his old job and the new, becoming an immediate advocate for the new tax reductions put forward in 2013 by the three corporations that control North Slope production. The governor pushed through the Big Three bill even though it required the shameful vote of oil company employees serving in the legislature to pass.
Under those circumstances, it is not surprising that more than 40,000 people signed a petition to repeal Senate Bill 21, the referendum now on the primary election ballot as Ballot Measure 1.
As Gov. Egan would have reminded us, the people need to vote “yes.” Alaska is not yet a banana republic -- or is it?
John Havelock served as Gov. Bill Egan’s Attorney General from 1970 through the 1973 special session.
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