Back in 1867, the United States made one of the best real estate deals in history - purchasing Alaska from Russia for just $7.2 million. That may sound like a lot of money, but when you consider that the deal included over 586,000 square miles of land, it equated to only around 2 cents per acre!
At the time, most Americans were not thrilled with the purchase. Secretary of State William H. Seward was behind the deal, so it became known as "Seward's Folly" or mockingly, "Seward's Icebox." The general feeling was that spending that much money on a frozen wasteland was a huge mistake. Little did they know that Alaska would later yield incredibly valuable resources and become an important strategic territory.
Let's take a closer look at the background and details of this historic purchase:
Why Did Russia Want to Sell Alaska?
By the 1860s, Russia was having serious financial problems. Their economy was struggling and the government was desperate for funds. Alaska was difficult and expensive for Russia to defend and govern since it was so far away and disconnected from the heart of the country. They had a hard time getting settlers to move there. Essentially, Alaska was a financial burden that Russia was ready to unload.
Some historians also say Russia was concerned that if they did not sell Alaska, it was only a matter of time before the British came in and seized control of it, given their presence in neighboring Canada. Rather than risk losing Alaska altogether, Russia decided it was in their best interest to sell it off while they could still make money on it.
Why Was the U.S. Interested in Buying Alaska?
The U.S. had multiple reasons for wanting to purchase Alaska:
- It would serve as a buffer between the lower 48 states and British North America. There were concerns about Britain gaining too much control in the region and threatening the U.S. borders. Acquiring Alaska prevented Britain from having Alaska and consolidated U.S. control in the northwest part of North America.
- Alaska was rich in natural resources like timber, coal and fish - resources the U.S. wanted to access. Even back then, they recognized that Alaska could play an important economic role.
- Some visionaries dreamed that Alaska would become an important trade hub connecting North America and Asia. They saw potential in Alaska's geographic positioning.
- From a military strategy perspective, Alaska's seaports could provide advantages for monitoring shipping lanes in the north Pacific.
- Adding Alaska would continue America's ongoing project of Manifest Destiny - expanding all the way to the west coast of North America from sea to shining sea.
Despite these compelling reasons, purchasing Alaska was still seen as a risky move by many Americans. It seemed outrageous to spend millions of dollars on such inhospitable land. But the deal was pushed through by Secretary of State William H. Seward, who had the foresight to recognize Alaska's potential.
Negotiating the Deal
In March 1867, negotiations between U.S. Secretary of State Seward and Russian minister to the U.S. Eduard de Stoeckl began in Washington D.C. Seward expressed interest in purchasing Alaska and the Russians were eager to sell.
After just a few weeks, they reached an agreement. The U.S. would pay $7.2 million for Alaska - which equated to less than 2 cents per acre. On March 30, 1867, the treaty was signed by Secretary Seward and Minister Stoeckl, completing the Alaska Purchase.
The Senate approved the treaty on April 9, 1867 with a vote of 37 to 2. The House approved it by a vote of 113 to 48 on July 14. Just like that, Alaska officially became U.S. territory. Russia formally transferred control of Alaska to the U.S. that October 18th.
Americans Upset Over "Seward's Folly"
Most Americans were bewildered and outraged when they learned of the Alaska purchase. Paying so much money for a frozen wasteland seemed absurd. They mocked the deal, calling it "Seward's Folly" since Seward was the main advocate, and joking that Alaska would make a nice reserve to store ice in (hence the nickname "Seward's Icebox").
Editorials and cartoons lampooned the purchase, saying what a mistake it was and that Seward had clearly lost his mind if he thought Alaska was worth $7.2 million. Americans did not understand what riches and opportunities this new territory held.
Over time, of course, it became clear just how incredibly valuable the Alaska Purchase was, completely transforming the trajectory of America's northwest expansion and providing immense economic resources. But in 1867, it was seen as foolish spending on land that would never provide any worthwhile return on investment.
Alaska's Hidden Value
What angry Americans at the time failed to realize was just how much potential Alaska had. Sure, it was icy and remote, but Alaska possesses tremendous natural resources that would later become hugely important to the country.
- Coal and oil - Alaska is rich in fossil fuels critical for energy needs in the lower 48 states. The North Slope region alone contains billions of barrels of oil, some of the largest oil fields in North America.
- Gold - Numerous gold rushes brought over 100,000 prospectors to Alaska in search of fortune. Gold mines continue operating today.
- Timber - Alaska's forests contain valuable lumber resources including spruce, hemlock, alder, cedar and birch.
- Copper - The largest copper mine in the world is located in Alaska. Copper is critical for electrical wiring and industrial applications.
- Fishing - Alaska's vast coastline offers abundant fisheries of salmon, pollock, crab, cod and more - key for the seafood industry.
- Strategic location - Alaska's position along the Pacific coast offered military and trade advantages between Asia and North America.
Considering all of these resources, paying around 2 cents per acre was an incredible bargain. It did not take long for Alaska to start providing tremendous economic value to the United States and for the purchase to be seen as visionary rather than foolish.
Alaska officially became the 49th state when it joined the U.S. in 1959. Today, this "icebox" produces billions of dollars in oil, gas, minerals, lumber, fish and more each year. It contains criticial petroleum reserves and strategic military bases. Alaska's economy is fueled by its abundance of natural resources, contributing substantially to the U.S. GDP.
No longer just a frozen tundra, Alaska is now home to over 700,000 residents and some of America's most stunning national parks filled with diverse wildlife. It draws visitors from all over the world hoping to experience its vast beauty and adventures.
Clearly, acquiring Alaska for $7.2 million was one of the greatest real estate bargains of all time. That relatively small investment added an enormously valuable piece of land to the United States that continues paying dividends 150 years later. What once seemed like Seward's folly is now seen as an extraordinarily visionary deal.
The Alaska Purchase exemplifies how world leaders need to look past immediate public perception and have the foresight to take bold risks. While it seemed outrageous at the time, acquiring Alaska was a savvy move that immensely benefited America's growth and prosperity. It took courage for Seward and others to push through the deal, but their wisdom provided one of the best returns on investment in U.S. history.