Alaska - Seward's Folly
The Russian presence in Alaska began in the mid-17th century, when members of Semyon Dezhnev's expedition first sighted Alaskan shores in 1648. In 1697, Vladimir Atlasov, a seasoned explorer who had conquered Kamchatka, visited these unexplored territories and encountered indigenous peoples who brought what he described as "sables" with "thin with striped tails"—animals that were actually raccoons, then unknown in Russia. Following the expeditions of Vitus Bering and Mikhail Gvozdev, the first Russian settlements were gradually established along the Alaskan coast.
Official St. Petersburg initially showed complete indifference to developing these new lands beyond the Bering Strait. The initiative fell to private hunters and traders, particularly from Siberia, who were immediately intrigued by reports of extensive sea mammal rookeries from Bering's expedition. Throughout the 1740s, Russian traders established close contacts with the Aleuts, organizing dozens of hunting expeditions along the Alaskan coast and neighboring islands, financed exclusively by private Siberian merchant companies.
The first Russian trading settlement was established on Unalaska Island in 1772, which later became the empire's main port in the region and the base of the Russian-American Company. When James Cook visited these areas in 1778, he estimated approximately 500 Russian traders were operating in the Aleutian Islands and Alaskan waters.
The Formation of the Russian-American Company
By the 1770s, Grigory Shelikhov had emerged as a dominant figure among the fur traders. His boundless energy led to the establishment of permanent Russian holdings in Alaska, with ambitious plans for constructing streets, parks, schools, and libraries. However, implementing such grandiose visions proved extremely difficult due to the remoteness of the region, with expeditions often lasting six to ten years and facing constant dangers from shipwrecks, famine, disease, and conflicts with natives or foreign ships.
The Russian government gradually recognized the need to unite the merchant companies operating in Alaska under state interests. In 1780, Mikhail Chulkov, Secretary of the Commerce Collegium, proposed creating a unified company with a 30-year monopoly on hunting and trade throughout the North Pacific. Due to Catherine the Great's staunch aversion to monopolies, this proposal failed to gain support. However, it inspired Shelikhov, who partnered with merchant Ivan Golikov to found an association aimed not merely at fur hunting, but at establishing permanent settlements in Alaska under the direct patronage of Irkutsk governors.
The political climate changed with Paul I's ascension to the throne. Acting contrary to his mother's policies, the new autocrat found the idea of establishing a fur trade monopoly constructive. In 1799, the Russian-American Company (RAC) was formed under His Imperial Majesty's patronage, tasked with developing and governing Alaska while representing Russian interests in the Pacific Ocean. The company's founders included Nikolai Rezanov, Shelikhov's son-in-law (later immortalized in the rock opera "Juno and Avos"), while Alexander Baranov—a descendant of an ancient merchant family who had served as Shelikhov's assistant since 1791—became its head.
These territories belonged not directly to the Romanov House but to the RAC itself. The company's shareholders included not only rich merchants and industrialists but also members of the imperial family—including Alexander I and the Grand Dukes—high-ranking statesmen, and the heirs of the company's founders: the Shelikhovs, Rezanovs, and Baranovs. Baranov himself proved to be a man of unparalleled integrity who, despite governing Russian America for over two decades and controlling millions of dollars, never amassed any personal fortune.
Economic Performance and Expansion
In the first quarter of the 19th century, the RAC's profits were enormous, reaching millions in revenue. This prosperity was fueled by exceptionally high prices for sea otter pelts, which generated unprecedented excitement in European and Asian markets. According to Baranov, revenue from sea otter pelt sales in 1811 alone amounted to 4.5 million rubles—an enormous sum at the time. From the late 18th century to the 1820s, the price of a single sea otter pelt rose from 100 to 300 rubles—twenty times more valuable than sable. The harvest of seals, beavers, otters, foxes, arctic foxes, bears, and walrus tusks brought considerable additional revenue. In its best years, the RAC's profitability reached an astonishing 1,000%, with naval officers employed by the company earning salaries ten times higher than the naval average.
The main economic value in Alaska at that time was indeed these sea otters, whose fur was dearly valued worldwide. There was no other significant value for such a remote and inaccessible region; climatic conditions were poor, and full colonization never materialized. Sources differ slightly on the Russian population: one account mentions "no more than a few hundred people, mostly employees of the RAC" (excluding Indigenous peoples), while another more precisely states "approximately 800 people" managed to develop vast coastal lands.
Until the 1820s, the company's profits allowed it to independently develop the territory. Beginning in the 1790s, Russians developed shipbuilding in Alaska, constructing 15 ships in Novoarkhangelsk (modern-day Sitka) between 1799 and 1821. In 1853, they launched the first steamship in the entire Pacific Ocean. Some Russian experts believed gold could be found in the territory—an assumption that would only be confirmed in the late 19th century, long after Russian departure.
Baranov's vision extended beyond Alaska itself. In the early 1800s, he established trade with Hawaii, importing salt, sandalwood, tropical fruits, coffee, and sugar. Planning to populate Hawaii with Old Believer Pomors from the Arkhangelsk Governorate, Baranov found common ground with local leaders, who trusted him so much they requested Russian citizenship for the islanders. Russians even eyed the Marshall Islands. However, St. Petersburg ultimately cooled the industrialists' ardor and categorically refused to annex these island territories to the empire.
Territorial Losses and Strategic Shifts
Russia's territorial control in the Pacific region experienced significant contraction during this period. Alexander II clearly had before him the cautionary example of his uncle, Emperor Alexander I, who had lost Russian possessions south of the 54th parallel of northern latitude to the United States in 1824 without any compensation, sacrificing these territories (modern-day Oregon and Washington states) to preserve friendly relations between the two nations. Curiously, one historical map suggests that Oregon was still designated as Russian America as late as 1841, though this appears contradictory to the 1824 loss and may reflect confusion between de jure claims and de facto control, or possibly indicate different interpretations of territorial boundaries during this transitional period.
The Russian focus in the Pacific was simultaneously shifting eastward. Under the Treaty of Aigun in 1858, Emperor Alexander II added the northern Amur region to the Russian Empire, followed by the Maritime region east of the Ussuri River. These acquisitions redirected Russia's eastern attention from Alaska toward the areas around Khabarovsk and Vladivostok, which provided superior access to the Pacific Ocean and East Asian markets.
Growing Vulnerability and the Decision to Sell
The Crimean War (1853-56) demonstrated the complete insecurity of Russia's eastern borders. In the event of military conflict, Russia proved unable to protect such a far-off region. Great Britain, which undividedly controlled Canada, had sustained interest in obtaining Alaska as an addition to British North America and had even threatened Kamchatka during the Crimean War. The peninsula's vulnerability was starkly exposed: several dozen soldiers in Alaskan garrisons could not have defended it, and a single well-armed combat ship could have destroyed an Alaskan city in a few volleys.
During the Crimean War, only a clever stratagem saved Alaska: since the RAC was officially a private company rather than a state enterprise, it negotiated a fictitious three-year rental agreement with the Americans, deterring British attack on the colony. Without this deception, Alaska would have been lost during the war itself.
These security concerns intensified after the Crimean War, when the risk of Alaska's seizure became acute. The weakness of the Pacific Fleet did not allow for full-fledged defense against military intervention. Alaska bordered both British and American territories—an extremely inconvenient neighborhood. Sooner or later, American or Canadian influence would spread sufficiently that Russia would have to cede Alaska, not necessarily of its own free will. Selling on its own initiative could at least secure reasonable compensation.
The first person to formally advocate selling Alaska in high circles was Nikolai Muravyov-Amursky, Governor-General of Eastern Siberia. In a memorandum submitted to Nicholas I in 1853, he argued that His Majesty's subjects would be unable to defend an area of 1.5 million square kilometers. However, by ceding this territory to the United States, Russia could build a relationship of trust with the overseas power.
Russian authorities also understood that Alaska required enormous investment that the government was unwilling to bear. Another serious argument for abandonment was the fur trade's decline: sea otters were nearing extinction, with their population significantly diminished. The region was in danger of becoming completely subsidized, as the RAC began experiencing problems providing food for colonists and had already negotiated with British companies for supplies.
Geopolitical Considerations
Theoretically, Alaska could have been sold to either the United States or Britain. However, the British were then considered Russia's main geopolitical rival, while Americans were regarded as principal friends. Relations between the US and Russia in the mid-19th century were close to ideal: Russia was one of few countries openly supporting the Union during the American Civil War, while Britain provided tacit support to the Confederacy.
Russia's Tsar offered to sell Alaska to the United States, beginning preliminary talks in 1858 and 1859, though the American Civil War delayed serious negotiations. By the mid-1860s, Russia was determined to sell before circumstances forced an unfavorable outcome.
The Transaction
On March 30, 1867, a treaty was signed in Washington, ceding Alaska to the United States for $7,200,000 in gold. In modern terms adjusted for inflation over 150 years, this represents approximately $108 million.
Regarding the actual monetary exchange, archival evidence recently discovered in the Russian State Archives provides precise documentation. An 1868 document compiled by a Ministry of Finance employee states: "For the Russian possessions in North America ceded to the North American States, the said States received 11,362,481 rubles 94 kopecks." This rubles figure represents the gold equivalent converted at the contemporary exchange rate. The document further specifies expenditures: "Of this 11,362,481 rubles 94 kopecks were spent abroad on the purchase of accessories for the Kursk-Kyiv, Ryazan-Kozlovsk, Moscow-Ryazan, and other railways: 10,972,238 rubles 4 kopecks were spent. The remaining 390,243 rubles 90 kopecks were received in cash." This archival evidence conclusively demonstrates that Russia received the stated sum and allocated it to what the nation most needed: railway construction.
The sale process itself was contentious within the United States. Baron Eduard Andreyevich de Stoeckl, Russia's envoy, actually had to persuade the Americans to purchase Alaska. A fairly influential group of US senators opposed the deal, questioning why they should buy a deserted piece of land with a disgusting climate, believing the cunning Russians were simply unloading their ballast for considerable money. "Why do we buy polar bears for this amount?" they protested. The Americans paid for the purchase by bank transfer as expected, and the money was subsequently used to build new railways in Russia.
Myths Surrounding the Sale
The Alaska sale spawned numerous myths and legends that persist in popular consciousness:
The Lease Myth: The most popular myth claims Alaska was not sold but leased for 100 years, and that Khrushchev or Brezhnev refused to reclaim Alaska in the 1960s for political reasons. This myth has absolutely no factual basis.
The Corruption Myth: This legend alleges that Baron de Stoeckl was bribed by Americans to secure favorable terms. However, the reality was precisely opposite—Stoeckl had to persuade reluctant American senators to approve the purchase.
The Lost Money Myth: This modern legend, appearing in the late twentieth century, claims the money was converted to gold bars and the ship carrying them to Russia sank, leaving Russia with nothing. As archival evidence demonstrates, Americans paid by bank transfer, and the funds were systematically allocated to railway construction.
These myths have been reinforced by various political figures over time. For example, Igor Panarin, a professor at the Diplomatic Academy of the Russian foreign affairs ministry, claimed in the early 21st century that Alaska was "only granted on lease, after all," suggesting Russia could reclaim it. He outlined apocalyptic predictions about the United States dividing along ethnic and cultural lines, with Alaska potentially returning to Russian control. Such claims, however, have no basis in historical documentation or international law.
Aftermath and Long-Term Consequences
Even after the sale to America, Alaska did not develop and remained abandoned land. Only 30 years after its sale was gold accidentally discovered there, triggering a gold rush that attracted tens of thousands of fortune seekers, though it soon collapsed. Oil was discovered only a century after the sale—in the 1970s—finally unlocking Alaska's true economic potential, which the Russians had never realized.
The Russian settlers of Alaska, despite their relatively small numbers, had managed to develop vast coastal lands and even reach California. They laid claim to Hawaii and eyed the Marshall Islands. However, they never ventured inland, fearing clashes with hostile Native Americans. Perhaps this catastrophic shortage of people played a fatal role in Russian America's fate—the inability to achieve critical mass for sustainable colonization ultimately made the territory indefensible and economically unviable without substantial state investment that Russia was unwilling to provide.
The Alaska sale remains one of the most controversial issues in Russian history, with no common consensus on whether it was necessary, whether it represented a mistake or even betrayal, or conversely, an extremely profitable transaction given the geopolitical and economic circumstances of the era.
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