Seward's Folly: Russia Sells Alaska for $7.2 Million

The United States formally took possession of Alaska from Russia on October 18, 1867, adding 586,412 square miles of territory — more than twice the size of Texas — for $7.2 million, roughly two cents per acre. Secretary of State William Seward had negotiated the purchase, and his critics immediately labeled it "Seward's Folly," a frozen wasteland that would drain the national treasury. The critics would eventually be proved spectacularly wrong. Russia's motivation for selling was strategic rather than economic. Czar Alexander II feared that Britain might seize the territory in a future conflict, as Russia had no realistic way to defend such a remote colony. The Russian-American Company, which had managed Alaska since the late eighteenth century, was operating at a loss. Selling to the United States would simultaneously remove a military vulnerability and weaken Britain's position on the Pacific coast by placing an American territory adjacent to British Columbia. Seward, a fervent expansionist, recognized Alaska's potential even when most Americans could not. The purchase was negotiated in a single all-night session on March 30, 1867, and the treaty was signed early the next morning. The Senate ratified the treaty in April, but the House delayed appropriating the purchase money for more than a year. The formal transfer ceremony took place at Sitka, where Russian and American soldiers lowered the Russian flag and raised the Stars and Stripes while cannons fired. The territory spent decades as an afterthought. Congress provided no formal government for Alaska until 1884, and it did not achieve territorial status until 1912 or statehood until 1959. But the Klondike Gold Rush of 1897-98 proved Alaska's mineral wealth, and the twentieth century revealed far greater riches: massive oil reserves at Prudhoe Bay, discovered in 1968, would transform Alaska into one of the most productive petroleum regions in the Western Hemisphere. The $7.2 million purchase price has been repaid many thousands of times over, making Seward's Folly one of the most successful real estate transactions in history.