On March 30, 1867, the Russian Empire signed a treaty in Washington, D.C., selling Alaska to the United States. The transfer included the Alaska Peninsula, a 10-mile-wide coastal strip along the western shore of British Columbia, and several islands — totaling approximately 1.519 million square kilometers.
The idea of selling Alaska had been discussed since 1853, when Governor-General of Eastern Siberia Nikolai Muravyov-Amursky suggested shifting focus to developing the Russian Far East and noted the likelihood of losing Alaska to American expansion. Additional reasons included the territory’s remoteness, high costs of maintenance, and challenges in defending it during potential conflict.
By the 1860s, key officials — including Grand Duke Konstantin Nikolayevich and the Ministry of Finance — supported the sale to reduce state expenses, particularly subsidies to the Russian-American Company, which managed Alaska’s resources.
The Price of Alaska
The U.S. paid $7.2 million — about $4.73 per square kilometer — a sum smaller than the cost of New York City’s Tweed Courthouse at the time. Adjusted for inflation, this equals roughly $156 million today.
In gold terms, the payment amounted to 348,331 troy ounces, worth approximately $1.184 billion at August 2025 gold prices.
Mixed Reactions in Russia and the U.S.
In Russia, critics like Baron Ferdinand Wrangel called the price “insignificant” and warned of U.S. advantages. The newspaper Birzhevyye Vedomosti also questioned the low valuation.
In the U.S., many doubted Alaska’s value, dubbing it “Seward’s Icebox,” “Johnson’s Polar Bear Garden,” and “Walrussia.” Secretary of State William H. Seward and President Andrew Johnson faced press backlash amid rumors of bribery.
From Gold Rush to Oil Powerhouse
The discovery of gold in the AJ and Treadwell mines in the late 19th century sparked the famous Alaska Gold Rush. Between 1880 and 2021, Alaska produced 51.68 million ounces of gold worth $19.2 billion at historical prices — nearly $175 billion in today’s value.
Today, Alaska’s economy is driven primarily by oil and gas, which make up 85% of its state budget. Proven reserves were estimated at 3.4 billion barrels at the start of 2023, with 2024 production averaging 421,000 barrels per day — far below the 1988 peak of over 2 million barrels.
A State Rich in Resources but Challenged in Growth
Despite vast resources, Alaska remains sparsely populated (about 740,000 residents in 2024) and heavily dependent on federal subsidies, ranking among the top three U.S. states in subsidy reliance. CNBC ranked Alaska last in business climate and 49th in infrastructure development in 2024.
Economist David Barker argued in 2009 that the purchase was unprofitable for the U.S., estimating that from 1867 to 2007, federal spending on Alaska exceeded revenue by $13.4 million (in 1867 dollars).
Debunking Myths About the Alaska Sale
- The deal was permanent — it was not a 99-year lease.
- Catherine the Great did not sell Alaska; she died in 1796, decades before the sale.
- The payment was received; no gold shipment sank en route.
Most of the funds were spent abroad on railway equipment for Russian infrastructure projects.
