Separated from the far eastern edge of the Russian empire by only the narrow Bering Strait, the Russians had been the first Europeans to significantly explore and develop Alaska. During the early 19th century, the state-sponsored Russian-American Company established the settlement of Sitka and began a lucrative fur trade with the Native Americans. However, Russian settlement in Alaska remained small, never exceeding more than a few hundred people. By the 1860s, the Russian-American Company had become unprofitable. Faced with having to heavily subsidize the company if an active Russian presence in the territory was to be maintained, the tsar and his ministers chose instead to sell to the Americans.
Seeing the giant Alaska territory as a chance to cheaply expand the size of the nation, William H. Seward, President Andrew Johnson's secretary of state, moved to arrange the purchase of Alaska. Agreeing to pay a mere $7 million for some 591,000 square miles of land-a territory twice the size of Texas and equal to nearly a fifth of the continental United States-Seward secured the purchase of Alaska at the ridiculously low rate of less than 2¢ an acre.
Later myths to the contrary, most Americans recognized that Seward had made a smart deal with the Alaska Purchase. Still, a few ill-informed critics did not miss the opportunity to needle the Johnson administration by calling the purchase "Seward's Folly" and "Seward's Icebox," or joking that the administration had only bought the territory to create new political appointments like a "Polar Bear's Bureau" and a "Superintendent of Walruses." Johnson's opponents (who were trying to impeach him at the time) also succeeded in delaying approval of the $7 million appropriation. But after a year of squabbling, Congress approved the purchase, and Russia formally transferred control of the vast northern land to the United States. Within a few decades, Alaska would prove to be an amazing treasure trove of natural resources from gold to oil, proving Seward's wisdom and exposing the shortsightedness of those who had once poked fun at the purchase.