Deal of the Century or “Seward’s Folly”? How Alaska was Sold

The document was signed on Russia’s behalf by Captain of the Second Rank A.A. Peshchurov, who would be appointed vice admiral and declared Chief Commander of the Black Sea Fleet and Military Governor of Nikolaev fifteen years later on account of his seniority and unblemished service record. On the American side, 250 soldiers in full dress took part in the signing ceremony under the command of the American General Lovell Rousseau.

Fifty years later, on 18 October 1917, the United States established the Alaska Day holiday, which is observed every year by residents of the state.

It is likely that the first Russians to see Alaska (which means “place of whales” in the languages of local indigenous peoples) were members of the expedition led by Semyon Dezhnev, who discovered the Bering Strait separating Asia and America in 1648—eighty years before the expedition of Vitus Bering, for whom the Strait was later named.

See also: What Happened to Russian America?

The actual discovery of Alaska itself belongs to the members of the expedition of A. F. Shestakov and D. I. Pavlutsky. On 21 August 1732 the boat St. Gabriel docked on Alaskan shores with Russian pioneers led by the surveyor M.S. Gvozdev. No Europeans had visited these parts before this moment. In the second half of the 18th century Russian fishers and fur trappers claimed these lands. The land acquisition didn’t move especially quickly, and the Russian settlers didn’t advance into the depths of Alaska for the most part, preferring the continental coastline.

See also: Russian Columbuses: The Distant Voyages of Russian Sailors

Skirmishes with the local population were not uncommon, though, of course, the confrontations that took place during these years cannot be compared to real battles. The suppression of a revolt by Aleuts in the Aleutian Islands (the 1763-1765 revolt) received some attention. In that revolt, the Russian settlers incurred a fair number of casualties by local standards. The dead alone numbered 162 persons. In addition, four whole ships were burnt. Nonetheless, the revolt was cruelly suppressed.

From 1799 through the time of its sale, Alaska was governed by the partially state-run Russian American Company (RAC), founded on the decree of Emperor Paul I. At various times, the investors in the company included very well-known figures in Russian society, including Grand Dukes. The Emperor awarded the RAC monopoly rights on fur, trade, and the discovery of new lands. At the same time, part of the basis of its authority was the right to represent Russia’s interests in the region.

This company was founded by the merchant, fur entrepreneur, and seafarer G.I. Shelekhov and his son-in-law, the Russian diplomat and traveler N.P. Rezanov (who is better known from the Russian rock opera Juno and Avos).

During the years 1802-1805, the Russian American Company would even wage a war against the indigenous peoples, which is sometimes referred to as the Russo-Indian War in documents. In actual fact, this war consisted of an endless series of skirmishes with the Tlingit tribe, who tried to prevent the Russian settlers from fishing and hunting in their native lands. The Tlingit sometimes succeeded in fighting back whole hunting parties and seizing individual settlements.

Nonetheless, the RAC managed to achieve an armistice, if not a lasting peace, with the local indigenous groups and renew their economic activities in these parts with naval protection. But the indigenous people, while doing what they could to avoid direct confrontation with the Russians, drove off the wildlife, making their work impossible at times. The story of relations between the Russians and the local population was much more varied than a simple military conflict. In Alaska, the Russians build schools and erected Orthodox temples. Local children learned Russian, mathematics, and geography. Interestingly, while English traders did whatever they could to get the indigenous peoples drunk, trade in vodka was strictly prohibited in the territories under RAC control.

All the same, various kinds of incidents kept happening up until the sale of Alaska. Interestingly, a definitive peace with the indigenous groups was finally reached only in our time. A commemorative ceremony was held on 2-3 October 2004 when the direct descendants of the chief director of Russian colonies in 1805, A.A. Baranov, visited the native meadows of the indigenous groups.

In 1821 Emperor Alexander I issued a decree prohibiting foreign boats from approaching the shore of Alaska. This act provoked resentment in North America and went a long way toward leading the United States to proclaim the Monroe Doctrine, which declared : “America is for Americans.”

Nevertheless, in 1824 Russia and the United States signed a treaty “On Friendly Relations, Trade, Navigation, and Fishing” in Saint Petersburg. It was this very document that established the border of the Russian Empire’s southernmost possessions in Alaska at a latitude of 54 degrees, 40 minutes. Russians were prohibited from settling farther south, and Americans were prohibited farther north. In 1825 an analogous agreement was reached with Great Britain. The Treaty on the North American Border signed in Petersburg established the division between British and Russian holdings along the Rocky Mountain range. The western slopes went to Russia, and the eastern ones went to Britain. The treaty also established rules for trade, shipping, and industry for Russian and English companies in North America.

After the signing of this document established a quite sinuous borderline, Great Britain constructed the city of Vancouver in its Canadian territories, in the province of British Columbia. This effectively cut Fort Ross off from Russian Alaska. As a result, the fort was sold in 1841, out of necessity, to an American of Mexican heritage on installment for a relatively low price. From this moment forward, the prospect of further Russian colonization of Alaska became uncertain.

There was a catastrophic shortage of people to help take possession of the new lands. The Russian Senate rejected the idea of relocating serfs to Alaska out of fear that they might flee their owners, but liberated peasants were also denied the possibility of relocating to this harsh and dangerous land. There were plenty of unoccupied lands that needed to be populated in Russia.

The idea of selling Alaska was first raised in 1853 against the backdrop of the recently started Crimean War. It was only a matter of time until the English and French entered the war. There were no men or means to defend Alaska. In 1854 the English launched an attack all along the perimeter of the Russian borders and even tried to seize Petropavlovsk-Kamchatsky, where they were repelled harshly. But in the case of the Russian settlements on the American continent, everything could have ended differently. The governor general of Eastern Siberia, Count Murav’ev-Amursky didn’t see any better option than selling Alaska to a third party, which would most likely mean the United States.

It is a little-known fact that, in 1854, the RAC decided on a sham sale of Alaska to the United States for a period of three years for 7.6 million dollars. After this term, Alaska was to return to Russia’s control. The reason was that the Americans were also very adverse to the idea of these territories being passed on to England, a hostile power whose rule they had escaped not so long before. A deal was even struck, but it was never finalized. The threat passed, and the need for such an action disappeared.

Meanwhile, it was this first sale of Alaska that laid the groundwork for popular speculations that it was never sold at all but rented to the United States. A term was even named: 99 years. But none of this had anything to do with reality.

The next suggestion that Alaska be sold came from the younger brother of the ruling Emperor Alexander II, the Grand Duke Konstantin Nikolaevich, in 1857. Then this idea met support in the Russian Ministry of Foreign Affairs in the person of its director, A.M. Gorchakov. However, the question was tabled for several years as a result of the Civil War that started in the United States in 1861-1865.

Russia supported the North in the Civil War, while Russia’s recent opponent in the Crimean War, England, took the opposite side. In 1863, two Russian squadrons were even sent to New York and San Francisco to rebuff potential attacks by the South or the English. Relations between the two countries were in the most auspicious and friendly state possible.

Russia was still feeling the effects of the inauspicious conclusion of the Crimean War of 1853-1856 and needed allies. For the moment at least, the United States fit this role very well and were ready to show their gratitude to Saint Petersburg. What’s more, both countries were united by their mutual enmity for “Foggy Albion.”

All the same, the main reason why Russia sold Alaska was not the desire to defend their North American holdings from encroachment by proud London or those very same United States. Especially since Russia was realistic about the difficult position of the United States, which had been devastated by Civil War and could hardly make a suitable offer. In agreement with the Russian Ministry of Finance, the lower threshold for a possible deal was set at 5 million dollars in gold.

The main reason for the sale was the losses that RAC had started incurring without giving their investors the profits of old. In 1866, the state treasury forgave the company a debt of 725,000 rubles, which was a significant sum by the standards of the time. Emperor Alexander II was forced to make arrangements to allot a 200,000-ruble subsidy to the Russian American Company each year.

We shouldn’t forget that the Russian treasury was in great need of liquid assets after the devastating Crimean War and the Peasant Reform of 1861, which abolished serfdom in Russia. The deficit in the Russian budget was in the range of 45 million rubles. The government resorted to taking foreign loans, borrowing 15 million pounds sterling from the Rothschilds at 5% annual interest.

Negotiations for the sale were entrusted to the Russian ambassador to Washington, Baron E.A. von Stoeckle, who had quite far-reaching connections among the American elite. What’s more, von Stoeckle was even married to an American.

On 30 March 1867, the treaty to sell Alaska was finally signed. After bargaining, Russia received 7.2 million dollars for a territory of 1.519 million square kilometers. Baron von Stoeckle retained 21,000 from the total sum for himself as a commission and gave 144,000 to senators, congressman, and journalists from major publications as bribes in order to create an auspicious atmosphere around the deal. At the time, many Americans thought this scheme was useless, figuring that they were acquiring “a suitcase full of ice and polar bears.” Wisecrackers called this deal “Seward’s folly” after the name of the US Secretary of State at the time.

In today’s prices, America paid Russia $3.19 for each hectare. By the way, there exist various methods of calculation. On this basis, the value of each purchased hectare of Alaska also varies. In 1867, it cost each American taxpayer less than 5 cents. After converting the money to gold, Russia gained 11 tons of this precious metal. Today that would be around 440 million dollars.

At the moment of sale, only 812 colonists lived in Alaska. However, the Russian Orthodox Church had taken in around 12,000 indigenous people and didn’t cease its operations in Alaska until October 1917. To this day, Orthodoxy remains the dominant religion among certain local tribal groups.

Many rumors circulated to the effect that Russia didn’t ever see this money. Some claimed the ship carrying the money sank in the Baltic Sea under unexplained circumstances—almost as if it were the result of a premeditated act. A suspect was even named among the members of a clandestine group of Southerners who specialized in diversions during the US Civil War.

Yet the money reached Russia and was used to construct railroads. In particular, this money was used to acquire materials for the construction of the Kursk-Kiev, Ryazan-Kozlov, and Moscow-Ryazan railroads.

Of course, America didn’t come out as losers in the “deal of the century.” During the era of “Gold Fever,” around 1,000 tons of gold was mined in Alaska, which would be worth 15 billion dollars on the market today. This region is currently drilled for oil and gas and mined for other valuable resources.

Today around 700,000 people live in Alaska, despite the harsh natural conditions.

Interestingly, an appeal showed up in March 2014 on the White House petitions website titled “Alaska—Back to Russia.” This document did not, however, manage to receive the required number of signatures to be considered. There also exists a completely official Alaskan Independence Party.