Was the Alaska Purchase a Good Deal?

When Secretary of State William H. Seward purchased Alaska from the Russian Empire in 1867, the press dubbed the expansionist effort “Seward’s Folly.” Since then the conventional wisdom has been that history vindicated Seward and his $7.2 million investment. But a paper by economist David Barker argues that the acquisition wasn’t necessarily beneficial for the lower forty-eight:

Is it possible that the purchase of Alaska, with all of its oil, timber, and other natural resources, for 1.7 cents per acre was not a good deal financially? Several factors indicate that it was not. First, the fact that income from Alaska has exceeded the initial purchase price is not sufficient to demonstrate that the purchase was a sound investment. The net present value of income to be received in the distant future is small. Oil revenues to be received in the twenty-first century should have been heavily discounted by anyone considering them in 1867. Second, the purchase was a risky investment. The prospects for the Alaskan economy were uncertain at the time of the purchase. Investment of the purchase price in other projects with similar or less risk might have yielded greater returns over the years. Finally, the return to citizens of the United States from the purchase of Alaska has been much less than the gross product of the Alaskan economy.