On October 18, 1867, the United States took possession of Russian America. The rather meager ceremony took place in the Capital of Russian America, Sitka. Some of the Russian structures of that day still remain and there is still a considerable Russian Orthodox religious presence in the State. Other than Russian and Russian-derived surnames among the Aleuts and some Southeastern Indians, there is little to show for the Russians’ time here.
The sale to the United States made a virtue of necessity. The Russians barely held the territory and both the US and Great Britain cast an imperialistic eye on the almost forsaken colony. The British were encroaching inland from Canada through the good offices of the Hudson’s Bay Company and the Americans had developed a very lucrative trade all along the Northwest coast and Alaska as well as significant whaling interests off Alaska’s Northwest Coast.
All the Western mercantilist powers wanted to trade with China for its tea, textiles, and porcelain, but the Westerners had almost nothing the Chinese wanted except specie and trading in specie was anathema in that time. The one Western product the Chinese had a great interest in was the fur of the Sea Otter, a luxury product of great value in China. The best source of Sea Otter fur was Russian America, but the Chinese and Russians hated each other and the Chinese would only trade with the Russians at one remote entrepot far up the Amur River. The Russians barely had the shipping to supply their colony and it was only with the greatest difficulty that they could bring otter fur far up the Amur River. Enter the Americans.
New England based shipowners, many of them Quakers, developed what came to be known as The Golden Round trade. They built handy, relatively shallow-draft vessels that could both ply the coastal waters of the Northwest and Alaska and sail the open Pacific, crewed them very lightly, and all the crew worked on shares of the voyage’s profits. They stocked the ships with trade goods ranging from trinkets to staples and also with rum and guns. The Tlingit Indians of Southeast Alaska were particularly fond of brass keys but also had a taste for rum and guns. The Russians came to rely on trading otter fur for staples with the Americans. The Americans also traded directly with the coastal Indians and Aleuts, much to the chagrin of both the English and the Russians. Loaded with otter and other fur, the Americans, who enjoyed good relations with the Chinese, sailed across the Pacific to the Chinese ports of their choice, though the trade concentrated on Shanghai, and exchanged fur for tea, textiles, porcelain and other Chinese products. They then sailed around Asia and Africa to Europe where they sold a portion of their goods and on to the US with the remainder. Voyages could be as long as four years and the AVERAGE profit from a voyage was 4000%!
Russia had developed a good relationship with the US, even sending a fleet to visit during the Civil War. The Crimean War was still fresh in the memory and a cash-strapped Tsar fearful of finding the hostile British on his eastern border sold Russian America to the United States for $7.2 million dollars. In an interesting and little known irony, the British ultimately almost paid for Alaska. In June of 1865, the British-built Sea Lion renamed as the Confederate States Ship Shenandoah all but destroyed the US whaling fleet off the coast of Northwest Alaska. The US pursued claims against Great Britain for violation of the British Neutrality Act in what became known as the Alabama Claims, named for the most famous Confederate commerce raider, the CSS Alabama. The Alabama Claims tribunal, one of the first usages of arbitration to settle international disputes, awarded the US some $15.5million in damages, $6.8 million of which was for the Shenandoah’s work off Alaska. Even without the contribution of the British, it is said that US commerce recouped the $7.2 million from fur, whaling, and fishing proceeds in the first year of US ownership.
By the late 1800s, the otters were all but extinct but gold had been discovered first in the Yukon Territory of Canada and then in several locations in Alaska. By the turn of the century, the Treadwell Mine in Douglas, now a suburb of Juneau, was the largest and richest gold mine in the World. The Treadwell had extensive works under the Gastineau Channel and the mine collapsed in 1917. It was supplanted by the Alaska-Juneau Mine across the Channel in Juneau which in turn became the largest and richest gold mine in the World until the US removed its labor allocation in 1944 and the mine was closed. The fixed cost of gold at $35/oz. made the mine uneconomic to re-open post war. An attempt to re-open the still-rich mine in the 1990s failed due to environmentalist opposition. For those of you who’ve been to Juneau or recall pictures of it, the mountain behind downtown Juneau has over 700 miles of tunnels in it from the A-J mine’s productive days.
The Territory continued to produce gold and other metals, fur, fish and timber but was largely ignored except as a sinecure for political appointees and their friends in business until WWII and the Cold War. The Alaska Highway giving the first road link to the Territory was completed in 1942. Extensive military establishments were placed in Anchorage and Fairbanks as well as on the Aleutian Chain where the Japanese for a time held Kiska and Attu Islands and bombed Dutch Harbor. The Cold War brought extensive military development in several areas of the Territory and a deadly game of chicken between Soviet and US aircraft and ships became commonplace.
Oil was discovered in significant quantities in Cook Inlet, near Anchorage in the early ’50s. This potential oil wealth as well as Soviet Bloc pressure on the US about the political status of its colonies and territories gave heart to supporters of Alaska Statehood. Statehood became a reality in 1959 and this year is the State of Alaska’s 50th Anniversary year. Oil was discovered at Prudhoe Bay on Alaska’s North Slope in 1968 – and the rest is history.