When word spread south of the gold dicovery in the Yukon, thousands of men from all over North America were drawn north by their gold fever. In 1897, nearly 100,000 men set out on the journey to the Klondike. Although there were many different routes, the fastest and most travelled began in Seattle, proceeded up through the inside passage, and ended in Skagway. In 1897, Skagway was only a tent camp, but in 1898 it was a town of more than 10,000 people.
Once in Skagway, the prospectors still had a long journey ahead of them to reach the goldfields. They needed to cross the coastal mountains through one of the two passes (Chilkoot Pass or White Pass) to Lake Bennett (which, by 1898, had become the largest tent city in the world, with over 10,000 people). The Chilkoot Pass crossed the mountains from Dyea to Lake Bennett, and was the route chosen by most people who were travelling on foot as it was shorter. The terrain was steeper than that of the White Pass, but it was much easier to walk. The White Pass traversed the mountains from Skagway to Bennett. The route was less steep, but longer than the other pass. It was not used as much because it was often closed due to bad conditions. This path through the mountains was originally discovered by Captain William Moore (the founder of Skagway) who had been hired by a government survey party. This pass was named after Thomas White, Minister of The Interior at the time.
Moore found financing for his trail from E.E. Billinghurst of the BC Development Company. This trail became known as the "Dead Horse Trail" because only 10% of the 5,000 people on horses who tried to cross it were successful. Moore expected that a railway would be built within a few years.
The need for a railroad over the mountains became very evident in 1897. The White Pass and Chilkoot trails were difficult to traverse and clogged with people. Improvements were made on both trails in 1897 and 1898. An aerial tramway was even built over the Chilkoot Pass, but this was simply not enough.
George Brackett, ex-mayor of Minneapolis, was the first person to try and improve the White Pass trail. In November 1897 he began work on his wagon road up the White Pass Trail. He had intended to eventually build a railroad over this route. After only 8 miles were completed, construction was stopped due to insufficient funds and a bad survey route. Brackett left the north to raise money for his venture. He returned in June of 1896 with the hopes of completing his wagon road. Brackett began charging tolls for the use of the road, even though it was far from complete. When stampeders refused to pay, Brackett had the U.S. army send troops to help maintain order.
Sir Thomas Tancrede, a representative of British financiers, and Michael J. Heney, a Canadian railway contractor, came to Skagway with seperate hopes of building a railway. After a survey of the mountains, Tancrede and his associates (one of whom was Samuel Graves, who would later become President of the railroad) concluded that a railroad through the pass was unfeasable. Heney, however, thought that it could be done; after a night of talking in a bar, he convinced Tancrede to begin the project (with the money of the British investors).
In April of 1898, the White Pass and Yukon Railroad company was started. Samuel Graves was named president of the railroad. They bought the right of way for the railroad from George Brackett, who was having money problems, for $50,000.
Five surveys were done on the pass to choose the most effective route for the railroad. The one that was chosen was the original White Pass route discovered long before by Captain William Moore. The construction was set to begin in the spring of 1898.