How the US bought a huge chunk of Russia for just £5.8m – as the Kremlin threatens to take it back

It was, quite possibly, the single shrewdest business deal ever struck. Yet, at the time, few people gave the savvy politician behind it much credit at all. In fact, William H. Seward was ridiculed by some for signing the cheque. 

In the 157 years since then-US Secretary of State Seward increased US soil by over half a million square miles, his decision to push for the purchase of Alaska from Russia has been vindicated a thousand times over. 

For just £5.8m, America bought themselves a state. Easily their largest one. Not only that, but the land is rich in both gold and oil reserves. For just £105m in today’s money, the US invested not only financially, but weakened a rival and – by making moves in the Asia-Pacific region – continued their promotion to world superpower.

The somewhat reluctant sale of Alaska would mark the beginning of resentments and hostilities between the two nations. Tensions that would last throughout the Cold War and even see recent mentions of Russia ‘taking back’ the chilly US state.

In 2022, a senior parliamentarian, Vyacheslav Volodin, threatened that Russia could attempt to reclaim Alaska. ‘Decency is not weakness,’ he said. ‘We always have something to answer with. Let America always remember, there is part of its territory… Alaska. When they start trying to dispose of our resources abroad, let them think before they do so that we also have something to get back.’

This is the story of how the United States came to buy such a giant piece of Russian land so cheap…

In 1867, few Americans were all that aware of Alaska. It was, after all, a very long way away. All the way up there above most of Canada. Thousands of miles away from folk and their everyday lives.

It was seen, by those familiar with it, as a barren tundra; a wasteland of nothingness. 

So when William Seward pushed President Andrew Johnson to buy the giant frozen landscape, he was laughed at by many Americans. Why waste the time and money on it? Especially during such a rocky time for the country.

The late 1860’s were dominated by the fallout of the US Civil War. Buying Alaska was hardly a priority for the divided and scarred nation.

Politicians and journalists opposed to the Alaska Purchase called it ‘Seward’s Folly’ early on in negotiations. They also referred to it as ‘Johnson’s Polar Bear Garden’, ‘Russian Fairy Land’ and, most amusingly of all, ‘Walrussia’.

Seward ignored the naysayers and pushed on with the deal. Eventually, he would negotiate a price of 29p per acre.

An incredible amount when you consider just how much money the US would come – and continue – to make from the gold and oil that Alaska has in abundance. Not to mention the healthy revenue streams that come from tourism to ‘The Last Frontier’ state.

William Seward – rightly – receives plenty of plaudits now for his role in the purchase. In truth, he couldn’t have pushed the deal through without President Johnson’s support.

He wasn’t the only Secretary of State that approved of buying Alaska, either. Many of his predecessors had toyed with the idea. Some had even sat across the table from Russian peers to discuss terms of agreements that would eventually break down.

So while it’s generally regarded that the Alaska Purchase was not ‘Seward’s Folly’, would it be fair to say that it was someone else’s? Was it ‘Tsar Alexander II’s Folly’? Well, not quite.

It may appear that Russia dropped a massive clanger in selling Alaska to the US. It’s easy to look back in 2024 and scoff at the decision to sell the vast land mass so cheaply. However, history and politics are seldom that straightforward.

The Russia of today would, of course, love to have retained the resource-laden land that sits just 55 miles away from its easternmost point. Yet at the time, they had little choice but to sell.

Why did Russia want to sell Alaska?

Despite only being the short distance of the Bering Strait away from Russian soil, Alaska is more than 4,000 miles from Moscow. It was hard to govern. Another big factor was – oddly enough – otters.

The mid-19th century harboured a surprisingly lucrative international sea otter fur trade. Russia had been harvesting the marine mammals for over a century by this point (having arrived in 1732 and officially declaring sovereignty over the territory in 1821).

By the 1850’s, Russian poachers had hunted the sea otter almost to the point of extinction. No otters? No point being there. Not when, as would soon be the case in the States, Russia was so distracted with military action of their own.

The final straw for Russia’s interest in Alaska came after their defeat to the British, French and Ottomans in the Crimean War. As is usually the case after a crushing defeat in war, Russia needed money. They had to raise cash. A quick way of doing this was to sell an asset. 

It was also a case of ‘better the devil you know’. Russia preferred to have the land mass owned by the relatively young nation of America, a country with which it was yet to have any major issues with.

Had they just abandoned it, there was every chance that Britain – an enemy – may have stepped in and occupied the land. This was something to be avoided.

Ironically enough, it was this fear of the English that spurred the Americans on to agree a deal to purchase the land.

‘The Americans worried that England might try to establish a presence in the territory, and the acquisition of Alaska – it was believed – would help the US become a Pacific power,’ wrote William L. Iggiagruk Hensley in Smithsonian Magazine in 2017.

‘And overall the government was in an expansionist mode backed by the then-popular idea of “manifest destiny”.’

After an all-night session of intense negotiations, representatives from both countries finally agreed on a deal. Hands were shook and contracts were signed at 4am on March 30, 1867.

The official transfer ceremony took place six months later in the Alaskan settlement of Sitka. Russian flags were lowered and US flags raised.

Of course, at no point during the negotiations were any of the tens of thousands of indigenous people living in Alaska consulted. Not a single Inuit, Yupik, Aleut, Athabaskan, Tlingit or Haida community leader was spoken to.

Alaska would begin to turn a profit for the US during the Klondike Gold Rush between 1896 and 1899. Which brought a sizeable influx of people and industry.

Yet it wouldn’t be officially deemed a US state until 1959. When then-US President Dwight D. Eisenhower signed the Alaska Statehood Act, part of it saw America cede more than 104 million acres of the territory over to indigenous people.

Which went some way to addressing the historical damage of freezing out the native population.