In the 1800s, the pristine wilderness of Alaska was a valuable source of natural resources
for its Russian settlers, and the territory was a major center of world trade.
And yet, at the height of the settlement’s prosperity, the Russians would shock the world
when they sold these lucrative lands to the young and territory-hungry U.S. in 1867 relatively
for a paltry sum.
In the decades since, Alaska has earned the U.S. back its purchase price hundreds of times
over with the hundreds of billions of dollars of revenue generated from the territory’s
natural resources, including fish, furs, timber, gold and other precious metals and, of course,
petroleum.
It just might have turned out to be one of the worst real estate deals in history for
the Russians, and it’s enough to make anyone wonder why Russia had to sell Alaska to the
USA in the first place.
Russia’s journey to Alaska started back in the 16th century.
In 1581, eager to spread their Orthodox Christian faith - and to get their hands on lucrative
fur trading lands - Russian forces pushed their way into the Siberian territory known
as the Khanate of Sibir, then controlled by a grandson of the legendary warrior Ghengis
Khan.
Russia now controlled the area’s vast natural resources and gained control of a large new
group of taxpayers, and within 60 years of their first journey into Siberia, they had
conquered the whole of Siberia and reached the Pacific Ocean in the East.
It would take more than 100 years for them to start to look beyond their continent, though.
In the early 18th century, Russia’s Peter the Great formed the country’s first navy
in order to explore the coast and determine just how far east the landmass of Asia extended.
It wouldn’t be long before Russia looked to expand beyond Asia and across the ocean.
In 1741, a Danish cartographer and explorer named Vitus Bering was serving as an officer
in the Russian Navy when he was tasked with leading the first Russian trans-Pacific exploration.
Bering and his crew set out from their staging point in the Siberian city of Okhotsk and
crossed the ocean via the straits that would eventually come to bear his name.
At their narrowest points, the distance between Siberia and Alaska is just 51 miles, so it
didn’t take long for Bering to catch his first sight of Mount Saint Elias, near present-day
Yakutat, Alaska.
While his first journey had been a success and led to the discovery of fertile new lands,
Bering wasn’t so lucky on his second journey.
He and his crew were caught in a fierce storm and shipwrecked on the Aleutian Islands, a
string of volcanic islands off the coast of Alaska that separates the Bering Sea to the
North from the Pacific Ocean to the South.
While his crew worked to fix the ship, Bering succumbed to scurvy and died in December of
1741.
Nevertheless, his crew filled their newly repaired ships with the furs of otters, foxes
and seals they had captured and returned home to share the news of the newly discovered
land of riches.
When they returned to Russia with their precious cargo, they so impressed the seasoned Russian
fur hunters with their haul that they prompted something akin to the Klondike Gold rush that
would follow a few decades later - Russian settlers flocked to Alaska en masse in search
of furs and fortune.
At its peak, Russia’s Alaskan colony was home to 800 intrepid settlers.
The land may have been rich in resources, but it wasn’t an easy place to live.
Communication was a major problem, considering that they were half a world away from St.
Petersburg, and supplies were not quick to arrive from the motherland.
They were also too far north for agriculture to successfully support a large number of
settlers, so the Russians began exploring further south looking for other settlements
with which to trade for food.
Eventually, the Russians sent ships as far south as California, where they traded with
the Spanish and even established their own settlement at Fort Ross in 1812 in present-day
Sonoma County.
By the mid 19th century, Russian Alaska with its copious resources was a center of world
trade.
And yet, Russian Tsar Alexander the 2nd would shock the world when he made the largest - and
perhaps the most foolish - real estate deal in history.
On March 30, 1867, Russian envoy Baron Edouard de Stoeckl met with U.S. Secretary of State
William H. Seward to broker a deal to sell 370 million acres of pristine Alaskan wilderness
to the U.S. for the paltry sum of $7.2 million dollars.
The Alaskan territory was one third the size of all of Europe, and the price tag in today’s
dollars would have been just $113 million dollars.
In the years since this historic deal went down, the U.S. has earned back their purchase
price hundreds of times over thanks to Alaska’s hundreds of billions of dollars worth of natural
resources, including the furs, fish, walrus ivory and timber that initially attracted
the Russians, but also the copper, gold, platinum, zinc, lead and, of course, petroleum that
would be discovered years later.
This has led to countless rumors about the deal, with some speculating that Russia only
agreed to lease Alaska to the U.S. and that the U.S. refuses to give it back; others actually
believe that the U.S. outright stole Alaska from Russia.
Despite these tales, historians from both countries agree that the sale was valid - but
why would Russia want to sell such valuable land to the U.S. for such a small sum?
Just 30 years after the first Russian settlers landed in Alaska, the sea otter population,
which was the Russian’s primary export, had been nearly decimated by overhunting,
and the colony was no longer profitable.
On top of that, Alaska was also incredibly difficult to support and to defend.
All of these issues may have been surmountable, but for one major problem.
In the 1850s Russia was in the midst of the Crimean War, a brutal, bloody conflict with
British and French forces over Russia’s threats to European interests in the middle
east.
Fighting a war required huge amounts of cash, so Russia was eager to unload the struggling
Alaskan territory in exchange for more money to help their war efforts.
Unfortunately, the proceeds of the sale did little to help the Russian war effort - by
the war’s end, Russia had lost the war along with more than half a million troops, mostly
to disease, malnutrition and exposure, and the peace treaty crippled the Russian economy
for decades to come, solidifying their fall from the ranks of world leaders in trade and
exploration.
The relatively young country of the United States, meanwhile, was undergoing a period
of rapid and controversial expansion.
The U.S. acquired Louisiana from France in the 1803 Louisiana Purchase, and in 1819 they
settled a longstanding land dispute with Spain when the U.S. took control of modern-day Florida
and the Gulf Coast lands in exchange for leaving Texas alone.
Of course, this wouldn’t last - after many failed attempts to purchase Texas from the
newly independent Mexican Republic throughout the 1820s and 1830s, the U.S. annexed Texas
in 1836 following years of bloody conflicts.
With new lands to the south secured, the U.S. turned its attention to the west, starting
with the Oregon territory.
By the early 1800s, Oregon was home to settlers from Spain, Britain, the U.S. and even Russia,
but by 1845, the territory was firmly under U.S. control.
Finally, they looked to the fertile lands of the south-west coast, and, following a
brutal 2-year war, Mexico ceded nearly 1,000,000 square miles of land to the U.S. and the state
of California was born.
U.S. Secretary of State William H. Seward would sum up the United States’ prevailing
expansionist mindset in 1848 when he wrote that “Our population is destined to roll
resistless waves to the ice barriers of the north, and to encounter oriental civilization
on the shores of the Pacific.”
Given this sentiment, it’s hardly surprising that the U.S. turned its attention to Alaska
next.
Americans saw the potential in Alaska’s resources, namely gold, fur and fish at the
time, as well as the strategic position of the territory to facilitate trade with China
and Japan.
The U.S. was also concerned that Britain, their mortal enemies at the time, would try
to establish a presence in the territory, and they felt that acquiring Alaska would
help the U.S. become a major power in the Pacific.
Not everyone agreed with Seward’s position on Alaska - the deal was sometimes referred
to as “Seward’s Folly”, and Alaska earned the nickname of “Seward’s Icebox” - but
history would side with Seward, and Alaska would go on to be one of the richest states
in the U.S.
Today, Alaska’s abundance of natural resources has allowed the U.S. to earn back the cost
of the purchase hundreds of times over, and the hundreds of billions of dollars earned
on the state’s resources allows Alaska to be one of few states with no state-level or
sales taxes.
In fact, every inhabitant of the state actually receives an annual stipend from the state’s
massive resource income.
Alaska is also the U.S.’s gateway to the Arctic and a key part of its defence system,
with military bases located in Anchorage and Fairbanks.
When the U.S. purchased Alaska from Russia, relations between the two nations were cordial
and the U.S.’s biggest enemy was Britain, but today the situation is quite different,
and Alaska functions as the U.S.’s window on Russia and allows them to keep tabs on
their adversary across the Pacific.
Additionally, with melting glaciers opening more of the Arctic to resource exploration,
Alaska gives the U.S. access to these potentially valuable lands and a seat at the table for
these important ecological discussions.
No conversation about Alaska would be complete without taking a look at the impact on the
indigenous peoples who inhabited these lands long before Russian or U.S. settlers arrived.
When Bering first crossed the strait and arrived in Alaska, there were already more than 100,000
people living there, including Inuit, Athabascan, Yupik, Unangan and Tlingit peoples.
There were 17,000 people living on the Aleutian Islands alone when Bering was shipwrecked
there.
The presence of these people did little to dissuade the Russians and, later, the Americans.
Early Russian settlers ruled over the native peoples with an iron fist, taking the children
of leaders as hostages to ensure cooperation, destroying the homes and hunting equipment
of tribes to make them dependent on settlers, and selecting Christianized leaders to control
the native populations.
The Russians also brought new weapons like guns and cannons which were foreign to the
indigenous populations, making it easier to subdue any possible uprisings.
By the time Russia ceded Alaska to the U.S., there were only 50,000 indigenous people remaining
in the territory - less than half of the original population.
When the U.S. took control of Alaska they were in the midst of the Indian Wars in the
continental states, and they took a similar position on the native peoples of Alaska,
treating them as potential adversaries.
In the 1860s the Bureau of Indian Affairs undertook a campaign to eradicate indigenous
Alaskan culture, outlawing their languages, religions, art, music and ceremonies.
Native Alaskans were denied U.S. citizenship until 1924, and they could not vote, own property
of file mining claims.
Even once citizenship was granted, it wasn’t until 1945 that outright discrimination was
banned - it was still common at that time to see Alaskan businesses with signs prominently
stating “No dogs or natives allowed”.
In later decades, some attempts at reparations were made - in 1971 President Nixon ceded
44 million acres of land and 1 billion dollars to Alaska’s native populations.
Many indigenous people don’t believe this is nearly enough, though.
They argue that the U.S. never had the right to buy Alaska from Russia in the first place,
and that the 1867 treaty was merely the transfer of the right to negotiate with native peoples
from Russia to the U.S.
Today, more than 740,000 people live in Alaska, 120,000 of whom are native peoples.
Russia’s decision to sell its Alaskan territory to the U.S. in 1867 may have made good financial
sense at the time for a nation deep in the midst of an expensive war, but it would go
down in history as one of the worst real estate deals of all time.
If you thought this video was interesting, be sure and check out our other videos, like
this video called “The Real Reason Russia Wants to Expand”, or perhaps you’ll like
this other video.