Pocket Change and Lint—Alaska Bought Cheap

 

The Negotiators--Left to right: Robert S. Chew, Secretary of StateWilliam H. Seward, William Hunter, Russian chargé d'affaires Bodisco, Russian Ambassador Baron de Stoeckl, Senator Charles Sumner,

Secretary of State William H. Seward, a hold-over from the Lincoln Administration in the cabinet of weak and unpopular President Andrew Johnson, concluded secret negotiations with envoys from Tsar Alexander II of Russia on March 30, 1867.  With a flourish of a pen he acquired Russian America, a huge territory encompassing 586,412 square miles occupying the northwest of North America.

Of course the interests and claims of the indigenous peoples who had already been enslaved and abused by the Russians and who didn’t recognize the land as the Tsar’s to sell were not considered at all.

Approved by Congress, not without controversy but in good time, the Treasury Department dutifully paid for the deal in full with a single check for $7 million, the equivalent of just a little over two cents an acre, virtual pocket change.

From a narrow strip of land along the Pacific Coast it opened up into trackless forest, rugged mountains, tundra, perpetually snow and ice covered lands on the Arctic Sea.  Except along the coast and a string of fur trading posts the new land was vastly under populated with only about 2,500 Russians and creoles, and 8,000 native peoples under the direct government of the Russian fur company, and an estimated 50,000 Inuit, Aleut, and other native tribes in the vast ungoverned areas.  A once lucrative trade in sea otter, harbor seals, and other furs was petering out due to excessive harvesting.  The territory had no other known resources except for timber too remote to get to markets.

Russian America in 1867.

The Russians had staked a claim to the whole Pacific Coast as far south as Spanish held Yerba Buena—later San Francisco—based on the explorations of Vitus Bering and his successors beginning in 1741.  A lucrative fur trade was established and in 1799 the Russian-America Company was given exclusive rights and charged with governing. 

By the early 19th Century much of the area along the coast was being contested by claims by the British and Americans.  The British relied on activity by their Hudson’s Bay Company around Vancouver Island and the Americans on the explorations of Lewis and Clark and activity by John Jacob Astor’s American Fur Company.  The rivalry first centered on what became called Oregon.  The Russian agreed to a treaty with the Americans in the 1840’s that ceded their coastal claims south of Vancouver.

The British, however, were a more troubling rival.  Not only had the Russia been at war with them in the Crimea from 1853-56, they were emerging as a global threat the Tsarist empire.  After gold was discovered along the Thompson River in 1858, the British established the Crown Colony of British Columbia to reinforce their claims on the mainland north of the recently settled border with American-held Oregon abutting the already established Crown Colony of Vancouver (1849) on the island.  These territories began to fill with gold seekers and settlers, were soon fairly strongly garrisoned with troops and the natural harbors made a perfect base for the mighty Royal Navy.

In St. Petersburg, the Russian government determined that its North American possessions were indefensible in the event of new hostilities with Britain.  Feelers went out to both the British and Americans about a possible sale.  The British turned the offer down, probably believing that they would sooner or later come into possession anyway. Serious negotiations with the United States never got underway after the Civil War broke out.

The end of the war in the in U.S coincided with a huge loan from the Rothschilds to the Tsar to pay off the debts of the Crimean War coming due.  Short on cash and fearing default, the Tsar dispatched a high level team to Washington to negotiate a deal that would pay off the loan, or most of it, and checkmate British ambitions in the Northern Pacific.

The Treasury Department check for $7 million  in specie used to pay for Alaska and stamped "Paid/"

The shrewd Steward recognized that he had the Russians over the barrel.  He needed to buy the territory for a sum that would not require any borrowing on the US’s part and which could easily be paid in a lump sum out of Treasury reserves.  The Russians were forced to settle for $7 million, far less than they had hoped.

The history books would have us believe that the whole nation mocked Seward’s Folly as a wasteful, bad investment.  But it was actually only a noisy minority in the press who made the biggest stink.  Most Americans, if they paid attention at all, where more than happy to grab more land and pinch British Columbia on both sides.  Many believed that the purchase would lead to the eventual acquisition of the British colonies on the coast.  The treaty sailed through a Senate dominated by a Republican super majority, many of the Senators loyal to Seward, if not his erstwhile Democratic boss.

A typical cartoon mocking the sale shows Seward and President Andrew Johnson hauling away ice while a laughing Russian officer makes off with a $7 bag of gold.

But the protesting press was loud and creative.  Alaska was denounced as a frozen wilderness not worth accepting even as a gift.  One unknowingly prescient editorialist said that the government would never recoup its investment unless gold was unexpectedly discovered at some distant time.

Of course gold was discovered, but not until 1898 when the Alaskan Gold Rush erupted.  By that time other Alaskan resources, particularly its fisheries, were also beginning to pay off.

But all of that was far in the future when Russian America became the U. S. Department of Alaska under the military governance of General Jefferson C. Davis—no, not the former Confederate President, the former Union officer.  A ceremony in the muddy streets of Sitka on October 16, 1867 outside of the log Government House hauled down the Russian Double Eagle flag—after three soldiers had to be sent shinnying up the flag pole to cut it loose from a snag—and raised the Stars and Stripes .  A handful of American troops and ships in the harbor rattled off a ragged salute.

The Russian residents and Creoles were supposed to be given three years to take American citizenship or return to their homeland.  But General Davis ordered most Sitka residents evicted from their homes to make way for Americans and general lawlessness soon overtook the district.  Most Russians packed up their belongings and headed home on the first overcrowded ships available. 

In the end the massive natural resources of Alaska including not only gold, but copper and other metals, fisheries, timber, and at last oil and natural gas, made Steward’s investment one of the shrewdest in history…if you don’t blame it for Sarah Palin.