This week in history: US buys Alaska from Russia

published 18 October 2013

662-alaska-b — Signing of the Alaska Treaty of Cessation

In 1799, Tsar Paul I set up the Russian-American Company to promote Russia's interests in America. It established several colonies, but most important was the Alaskan port of Sitka, vital to the fur trade.

However, during the 19th century overhunting led to falling revenue, forcing the Russian government to take charge of the company directly.

After losing the Crimean War, Moscow feared the British would annex Alaska by sending troops from Canada.

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So, short on funds, the Russians put Alaska up for sale in 1859. Talks with America's government were postponed by the Civil War, but by 1867 a deal was agreed for $7.2m ($112m at 2012 prices).

The reaction from the American public was mixed. By the time of the first official census in 1881, settlers accounted for little more than 1% of the 30,000 people living there.

But the discovery of gold in 1896 and the development of the fishing industry led to a large influx, with the population reaching nearly 65,000 by 1910. While the gold boom quickly ran its course, a mining industry grew up around other minerals.

The granting of full statehood in 1959 cemented Alaska's status. But what really sealed its future was the discovery of major oil deposits in the 1970s. While reserves have declined, Alaska remains America's third-largest producer of crude.

Ironically, while oil taxes swell state coffers, it is the second-largest net recipient of US government funds per head, due to infrastructure spending.