Published by EH.Net (July 2004)

Terrence Cole and Elmer E. Rasmuson,Banking on Alaska: The Story of the National Bank of Alaska. Two volumes. Fairbanks, Alaska: The University of Alaska Press, 2001. Xiii + 523 +xii + 403 pp. $25 (paperback).

Reviewed for EH.Net by Richard H. Keehn, Professor of Economics Emeritus, University of Wisconsin-Parkside, Kenosha, Wisconsin.

Terrence Cole, professor of history at the University of Alaska Fairbanks, and Elmer Rasmuson, retired president then CEO of the National Bank of Alaska (NBA) from 1943 to 1977, collaborated to produce a two-volume history of the National Bank of Alaska. Volume I, “History of NBA,” is primarily the work of Cole while Volume 2, “Elmer’s Memoirs,” was authored mainly by Rasmuson. The authors targeted the general reader rather than business and banking historians and, as the book’s cover states, attempted to tell the NBA story in an entertaining and informative way.

Volume I, “The Story of the National Bank of Alaska,” covers three main topics: Alaska history and Alaska and U.S. banking history; important figures in Alaska banking and the National Bank of Alaska with special emphasis on the Rasmuson family; and a history of the National Bank of Alaska and its predecessors. Both volumes contain numerous illustrations, including pictures of the Alaska landscape, individuals prominent in Alaska history, and NBA facilities and documents. Cole made extensive use of records from the bank’s archives and utilized his previous work on Alaska history to explain events influencing the bank and state.

Most of the 16 chapters contain information on the main topics outlined above but each chapter tends to focus on one of those. Early Alaska and state banking history are covered in chapter 1, “The Merchant Banking Era 1873-1913,” and chapter 2, “Banking on the Railroad 1914-1916,” before the establishment of the Bank of Alaska (forerunner of the National Bank of Alaska) in 1916. These chapters illustrate the frontier nature of the Alaska economy and make clear the difficulties of trying to provide banking services in a vast and thinly populated area. Alaska history also dominates chapters 3, 5-7, 10, 12 and 15. Chapter 3 covers the impact of WWI on the Territory. Chapters 5-7, “Road to Recovery 1918-1929,” “The Great Depression 1929-1939,” and “War Comes to Alaska” covering the years 1939-1943, mention Bank of Alaska operations and performance, but the emphasis is on the development of and problems facing the Alaska economy from 1916 through 1943. Chapter 12 describes the Alaska earthquake of 1964 and its impact on the bank and the state’s economy. The major focus of Chapter 15 is the development of the Trans-Alaska Pipeline 1968-1978, an event that continues to exert an influence on the bank and the Alaska economy and its residents, partly through the Alaska Permanent Fund.

The Rasmuson family is the focus of several chapters. Chapter 4, “Swedish Pioneer Family in Alaska,” focuses on Edward A. Rasmuson, the father of Elmer. Chapter 8, “The New President,” reviews Elmer Rasmuson’s background, including his experience with Arthur Anderson in New York, before returning to Alaska in 1943 to take over control of the bank from his father. Chapter 13, “The Earthquake Mayor,” covers Elmer’s political career, including his stint as mayor of Anchorage, subsequent attempts to gain higher office, and his service as president of the Alaska Permanent Fund. Chapter 14 reviews Rasmuson’s role in governance of the University of Alaska System, where he was a member of the Board of Regents from 1951 to 1969, and president of the board from 1956 to 1969. The Fairbanks campus boasts a library bearing his name.

The history of the Bank of Alaska 1916-1950, and the successor National Bank of Alaska from 1950, is the primary focus of chapters 8-9, 11, and 16. WWI precipitated an economic collapse in Alaska that almost did in the new bank. Edward A. Rasmuson took over in 1917 and worked to put the bank on more solid footing and thereafter the Rasmuson family played a major role in bank affairs. In the formative years, the bank was plagued by a shortage of capable and trustworthy branch managers, a problem made more serious by distance and poor communications. The strongest parts of these chapters cover the difficulties of conducting a banking business in an area one-fifth the size of the continental U. S., but with a small population scattered over a rugged terrain with an often hostile climate. Cole touches on the problems of trying to diversify bank assets and liabilities in a territory and then a state dominated by only a few major industries, often with only one operating in any given locale. Mining, fishing, fur trade, timber and pulp, the military, government, tourism and, from the 1950s, oil were major economic endeavors at various times and the relative importance of these changed substantially over the years covered. Cole reviews general banking problems in the 1930s and 1980s but the discussion is not closely tied to the behavior and performance of NBA during those decades. The Great Depression caused serious problems but recovery came earlier in Alaska than in the lower 48 states and this helped the bank. The volumes include information on the influence of the Rasmuson family on the institution throughout its history. Elmer Rasmuson retired as CEO at age 65 in 1974 but remained active in bank affairs for some time after that. Ed Rasmuson, the son of Elmer and grandson of E.H., became CEO in 1998, continuing a Rasmuson role in bank management.

Cole focuses on the advantages of branching in Alaska, and Elmer Rasmuson’s efforts to change Alaska banking law to permit statewide branching. Branch banking was seen as a way to lessen the problems arising from the inability to diversify in local areas, and to serve a population scattered over a vast area. The 1960 merger of several banks with the Bank of Alaska made that bank the largest in the state with 19 branches in six locations. Not surprisingly, other bankers objected to the threat of monopoly power supposedly posed by NBA as it strove to expand by mergers and by opening new branches statewide. By 1978 National Bank of Alaska operated 34 branches in 19 communities. Total assets hit $1 billion in 1983 and by 1990, the bank had close to 50 percent of Alaska bank assets. A map of Alaska placed before the title page shows the locations of bank headquarters and branches 1916- 2000 but does not identify other features of Alaska geography. While the map is essential for those unfamiliar with Alaska, a more complete map of the territory/state would have been even more helpful to many readers.

The collaboration between Cole and Rasmuson is useful, but leads to some duplication. In volume I, the history of the NBA is often obscured by extended coverage of other topics. Volume II, “Elmer’s Memoirs,” is just that and will be of most interest to bank employees, their families, and others familiar with Elmer and the bank. Much of the material on personalities, especially the Rasmuson family, included in the first volume should have been placed in the second. Material on bank operations and performance, included in the chapter “The National Bank of Alaska” in volume II, belongs in the first volume where it could be used to better evaluate bank behavior and performance. The emphasis on bank personnel and products in volume 1 comes at the expense of a more detailed review of bank performance. Using moral hazard and adverse selection to study NBA activities over time would have improved that review.

A major shortcoming of the book is the lack of consistently presented performance data, especially balance sheets and income statements. References to performance are scattered throughout the text but not presented in a consistent manner or summarized in charts or tables. Only one balance sheet appears (for 1928) and no profit and loss statements are included. The final chapter in volume 1 provides charts showing total assets of Alaska banks and the BOA, and the percentage of Alaskan bank assets owned by the National Bank of Alaska. More information summarized in this manner would have made it easier to evaluate bank progress, performance, and problems over time. Collection problems and write-offs are discussed in places, but the incomplete nature of the information does not permit an evaluation of the impact of changing quality of bank assets and the relative importance of slow and bad loans on bank behavior and performance.

The two volumes in paperback weigh more than seven pounds, making them a heavy read and more like a cocktail table set. Much of the material included is aimed at present and former employees, customers, and friends of Rasmuson. More careful editing would have made the set a more rewarding read. Those looking for a primer on Alaskan banking and economic development, and on the Rasmuson family, will find the study useful. Specialists in banking and banking history will be disappointed by the lack of information and analysis on bank behavior and performance over time.

Richard H. Keehn is an emeritus professor of economics at the University of Wisconsin-Parkside. His primary research areas are banking and business history with a special focus on Wisconsin banking and manufacturing development.