The discovery of gold in the Canadian Klondike in 1896 led to a disagreement between the United States and British held Canada over the Alaska-Canada boundary.

The treaty outlining the U.S.A.'s 1867 purchase of Alaska from Russia, established the boundary of southeast Alaska (referred to as the Panhandle) as being 30 miles from the coast.

However, the entrance to the Klondike was through an inlet called Lynn Canal. The Canadians claimed that the boundary ran across inlets from headland to headland, thus placing Lynn Canal within Canada, and hence restricting access to the Klondike.

The United States held that the boundary line followed all the windings of the coast. The dispute was referred to a joint arbitration commission of two Canadians, three Americans, and one Englishman. In 1903, this panel met in London and upheld the U.S. claim by a 4 to 2 vote.