How the U.S. Purchased Alaska from Russia in 1867
- Craig Kaiser
- Aug 12
- 6 min read
Before Alaska belonged to the United States, it belonged to Russia and was known as "Russia America." In 1867, the U.S. purchased Alaska from Russia for $7.2 million- which is roughly just 2 cents per acre. This decision was initially met with criticism, but soon became one of history's greatest real estate deals. What seemed like a frozen wilderness turned out to be a treasure trove of natural resources and strategic value, a reality that feels especially relevant today as U.S.-Russia relations remain strained.
How the U.S. Purchased Alaska from Russia in 1867
On October 18, 1867, the United States officially acquired Alaska, purchasing the vast territory from Russia for $7.2 million- equivalent to less than 2 cents per acre. Long before this transaction, Indigenous peoples had inhabited the rugged and challenging region for thousands of years. The purchase, totaling an impressive 586,412 square miles, roughly twice the size of Texas, was spearheaded by William Henry Seward, the visionary and expansionist secretary of state under President Andrew Johnson.
Alaska Purchase: Background & Negotiations
Russia wanted to sell its Alaska territory, which was remote and difficult to defend, to the U.S. rather than risk losing it in battle with a rival such as Great Britain. Russia's decision to sell Alaska wasn't about generosity. The Crimean War had drained the Russian treasury, and maintaining Alaska, separated from Russia by thousands of miles, proved costly and impractical. Tsar Alexander II faced a simple choice: sell to America or risk losing the territory to Britain during the next conflict.
Before the Civil War, discussions about selling Russian America (now Alaska) to the United States occurred in 1854 and 1860. After the war, serious negotiations resumed, led by Baron Edouard de Stoeckl, Russia’s minister to the U.S. Stoeckl supported the sale, believing it would benefit Russia and strengthen U.S. ties. In late 1866, he consulted Czar Alexander II and top officials, gaining approval to negotiate Alaska's transfer.
Secret negotiations between Seward and Stoeckl began in March 1867. Seward and Russian minister Eduard de Stoeckl worked through the night of March 29, 1867, hammering out details for a deal that would reshape North America's map forever. But the treaty needed Senate approval, requiring the support of Foreign Relations Committee chairman Charles Sumner. A natural scholar, Sumner dove into studying the Russian-held territory, spending hours at the Library of Congress and the Smithsonian examining maps, journals, newspapers, and over 100 books in multiple languages.
On April 8, 1867, Sumner addressed the Senate. With just one sheet of notes, he spoke for three hours, delivering an “encyclopedia” of facts about Alaska. He concluded with a detailed summary of its population, climate, natural resources, and fisheries. Sumner insisted the new land should have an indigenous name- Alaska. The next day, the Senate approved the treaty by a vote of 37 to 2. Alaska became the 49th state on January 3, 1959, and is now celebrated for its breathtaking wilderness and rich natural resources.
The Nation Reacts: Controversy and Criticism
The Senate, along with most of the American population, was very skeptical about the wisdom of Seward’s purchase. It was mocked as "Seward’s Folly," "Seward’s Icebox," and "Seward’s Polar Bear Garden. Newspapers mocked the acquisition as a wasteland of ice and snow. House Republicans tried to block funding, arguing Congress was throwing money at a rugged wilderness area with no valuable resources. The territory seemed to prove critics right at first. Early American settlers found harsh conditions, limited infrastructure, and challenging weather. Alaska felt like an expensive burden rather than a strategic asset.
From Folly to Fortune: Alaska's Turning Point
Initially met with skepticism, the purchase of Alaska ultimately proved to be a strategic triumph for the United States, starting with the gold rushes of the 1890's. The Klondike Gold Rush alone brought thousands of prospectors north, putting Alaska on America's mental map and shifting public opinion of the purchase. As gold prices hit record highs in 2025, the value of Alaska and its resources has been further solidified.
But gold was just the beginning- oil changed everything. Alaska's petroleum reserves transformed the territory from liability to goldmine. The Trans-Alaska Pipeline, completed in 1977, pumps billions of barrels of oil across 800 miles of wilderness. Today, Alaska produces about 500,000 barrels daily. The numbers tell the story: Alaska has generated over $150 billion in oil revenue since the 1970's- more than 20 times what America originally paid.
Additionally, Alaska's strategic importance became undeniable during World War II, far surpassing its rich mineral resources. Situated on the northern Pacific rim, it served as a critical hub for both defensive and offensive operations, a potential entry point for enemy attacks, and a key base for lend-lease initiatives. Its proximity to Japan, particularly through the Aleutian Islands, made it a central focus of military strategy for both American and Japanese forces. The Cold War elevated its importance further, with radar stations and military bases monitoring Soviet activity across the Bering Strait.
Modern Relevance: Alaska in Today's Headlines
Alaska's strategic importance feels fresh again as U.S.-Russia relations remain tense. The upcoming Trump-Putin meeting brings renewed attention to this northern frontier, where American and Russian territories sit just 55 miles apart across the Bering Strait. The irony is striking: Russia sold Alaska to avoid losing it to Britain, only to watch America develop it into a strategic and economic powerhouse that now serves as a bulwark against Russian expansion.
The Ultimate Return on Investment
As tensions with Russia continue making headlines, Alaska stands as a reminder that sometimes the deals that seem crazy at first turn out to be strokes of genius. What seemed like Seward's folly became one of history's greatest real estate deals. Alaska contributes roughly $50 billion annually to the U.S. economy through oil, fishing, tourism, and military spending. That frozen "wasteland" purchased for 2 cents per acre? It's now worth an estimated $1 trillion. In 2025, the $7.2 million that the U.S. spent to acquire Alaska is equivalent to $161,955,313.81.
The Rising Value of the Last Frontier
The rise in land and property values in Alaska further underscores the enduring benefits of the Alaska purchase. According to data from LandGate and LandApp, the average value of land in Alaska in 2025 is around $6.25 cents per acre- a 212.5% increase than what it was purchased for in 1867.
Alaska Land: Cost Per Acre in 2025 (Filtered For >2 Acres)
Type of Land | Minimum Price/Ac | Average Price/Ac | Maximum Price/Ac |
All | $6.25 | $71,158.12 | $39,820,172.36 |
Just Residential | $36.76 | $82,014.12 | $4,801,892.93 |
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Land values in Alaska have risen significantly due to several key factors. Alaska boasts an abundance of natural resources, including oil, gas, and minerals, which play a vital role in supporting the U.S. economy and advancing energy independence. Alaska’s stunning landscapes and outdoor recreation opportunities also attract tourists and seasonal residents, increasing land demand. Improved infrastructure, like better transportation networks and power grid expansions, have made remote areas more accessible.
Additionally, limited land in high-demand regions for clean energy development and data centers has steadily driven up prices. Alaska is home to an increasing number of data centers, concentrated mainly in Anchorage and Fairbanks, with an additional, smaller facility located in Prudhoe Bay. The growth of AI in today's digital age has led to an increase in the need for data centers, but there's a lack of suitable sites with adequate power and fiber access, which has led to increased demand for data center land in rural regions, like Alaska, with developers paying premium prices for properties that check their boxes.
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