Did you know that Alaska was sold by the Russian Empire to the United States of America on March 30th, 1867 for just $7.2 million?
The total area of Alaska was approximately 586,412 square miles, and the selling price was at just about 2 cents per acre. In just 50 years, America managed to earn back the amount over 100 times. After Russia had expressed interest in wanting Alaska back from America, the news filled with much speculation about the Alaskan purchase.
There were rumors that America stole Alaska from Russia. Others claimed the Russians decided to lease the land to America, and they didn’t want to return it. The deal between the two countries was honest, regardless of the widespread rumors. Each side had legitimate reasons to go through with the deal.
Alaska (/əˈlæskə/) Aleut: Alax̂sxax̂; Inupiaq: Alaskaq; Russian: Аляска, translit. Alyaska) is a U.S. state in the northwest extremity of North America. The Canadian administrative divisions of British Columbia and Yukon border the state to the east, its most extreme western part is Attu Island, and it has a maritime border with Russia (Chukotka Autonomous Okrug) to the west across the Bering Strait.
Before the Alaska Purchase
Under the Russian Empire in the 19th century, Alaska was the base of international trade. The capital of the state at that time was Novoarkhangelsk (Sitka as it is known now). The merchants in that region primarily traded Chinese tea, fabrics, and ice. The southern United States saw them as a fundamental requirement.
The empire had built factories and ships and was mining coal in the area. In fact, everyone was aware of the large amounts of gold reserves in the region. Not surprisingly, when they heard that Russia was planning to sell their property, they felt it was an act of madness.
It was the Russian Tsars and their families who owned the Russian-American company set up in Alaska. They benefited from the enterprise as they collected large amounts of tax from the company.
The ruler of the Russian settlements in Alaska was a merchant who went by the name Alexander Baranov. He also called himself the “Russian Pizarro“, and was completely obsessed with Alaska.
Baranov set up factories, fortresses, schools and shipyards. Also, he educated the people of Alaska to plant potatoes and Rutabaga and even increased the sea otter trade in the region.
He liked Alaska so much that he married the daughter of an Aleut Chief.
Alexander Baranov managed to successfully increase the company’s profit by over a 1000 percent. However, the empire replaced him with captain-lieutenant Hagemeister when he became too elderly.
When Hagemeister was in charge, he obtained new employees and shareholders from the military. These employees and shareholders quickly benefited from the profitable enterprise. However, their actions ultimately lead to the ruin of the company.
The new owners of the company were obsessed with making more money. Furthermore, they disregarded how it may affect everything else around them. The heads of the company were earning 150,000 rubles a year. This was ten times the amount received by the lower common officers.
Also, they bought sea otter fur for half the price which resulted in the sea otters almost becoming extinct during the following 20 years. As a result, this affected the profitable trade significantly as Alaska didn’t have enough sea otters.
On top of that, they repressed the native people, suppressing any uprisings. The Russians would use their military ships to fire on the villages along the coast.
As the heads had eyes only on making more money, they started trading in tea and ice. However, they couldn’t organize properly to make this trade profitable, and they didn’t want to reduce their high salary.
Subsequently, they asked the government to transfer the company to state subsidiaries. This way they increased their wages to 200,000 rubles a year.
Even though they were trying their level best, they couldn’t save the company from spiraling down.
Influence of Military Conflict
In 1853, there was a military conflict between Russia, Britain, France, and Turkey which lasted for three years. Russia quickly understood that they could no longer hold or supply their prized territory, Alaska. The concerns of the Russians further exacerbated as the sea routes were under the control of their enemies.
Even though they knew that there was plentiful of gold available, they weren’t able to mine it successfully. The Russians also feared that Britain would block Alaska. Then they would be left with absolutely nothing.
Even though the tensions between London and Moscow increased, the relationship between America and Russia continued to grow. Both the countries had come up with the idea of putting Alaska up for sale.
The Russian envoy Eduard de Stoeckl had been residing in Washington. On behalf of the Russian Tsar, he decided to open talks with the American Secretary of the State, William H Seward.
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When the public became aware of the deal, they were completely against it. The American newspapers were writing cynical articles such as “Why America needs an “icebox” and 50,000 Eskimos who consume fish oil as their breakfast?”
The Russian newspapers asked the government “Why they wanted to sell Alaska when they spend countless hours and effort into developing it into a profitable land which had telegraphs and gold mines“?
The Congress also was against the deal, and they disapproved of it. However, on March 30th, 1867, both the American and the Russian parties in Washington D.C. inked The Treaty of Cession of Alaska for a sum of $7.2 million.
The barren land of Siberia, at that time, was worth at least 1395 times more than the selling price of Alaska. Nevertheless, the situation of Russia was dire. They didn’t want to end up with a loss, they went ahead with the deal. This deal became known as the Alaska Purchase.
Following the Alaska Purchase, the Americans started occupying the lands of Alaska and renamed the city to Sitka. The Russians who didn’t want to be a part of America left the area on the merchant ships.
Soon after, the Klondike gold rush started in 1896 which netted the United States millions of dollars. However, one will never know how the relationship between Russia and the other countries would have played out if they hadn’t gone with the Alaska purchase.
Image Credit: Boston Public Library via flickr.com