The U.S. bought the Alaska Territory from Russia in 1867 for $7.2 million.

The deal was initially dubbed as "Seward's Folly," a jab at U.S. Secretary of State William Seward, who promoted the transaction.

After punching the numbers, Seward's protagonists may have been right, Barker said.

From a purely financial standpoint, looking at the years 1867 to 2007, the numbers don't pencil out in the nation's favor. After examining the purchase as a real estate transaction, Barker concluded that a fair price for Alaska would have been less than the $7.2 million in gold dollars paid.

"In fact, in order for a purchaser to achieve a positive net present value, the price of Alaska would have to have been much less than the price paid: perhaps negative," he wrote in a paper released in early November.

Even his students were surprised from his conclusions, said Barker in a telephone interview Nov. 16.

His efforts were to make the point with his students that while sometimes a real estate deal looks good, there is a lot of negative cash flow for a considerable amount of time, "so you have to carefully run the numbers before you put money into a real estate deal."

From a purely economic standpoint, Barker would have said "no" to the deal. The United States could have let the British have Alaska, established a free trade agreement with that country and achieved all the benefits without paying the costs.

Still, the Alaska purchase was perhaps a much better deal than the purchase of the Virgin Islands in 1917, for which the United States paid Denmark $25 million in cash.

"The purchase of the Virgin Islands is the clearest example of a negative net present value purchase," he wrote. "The initial cost was $25 million, and administrative costs and aid have been high. Moreover, a law passed in 1921, still in effect, requires all federal revenue collected in the Virgin Islands to be transferred to the local government. Expenses are high and net revenues have been non-existent."

The United States in 1867 reached a tentative agreement with Denmark to purchase the Virgin Islands for $7.5 million, but after the scandal surrounding the Alaska purchase, the treaty was not brought to a vote in Congress.

In 1917, the price level was 9 percent lower than it had been in 1867, so in real dollars, the United States paid 3.6 times what it could have purchased that territory for earlier, he said.

Barker also concluded that the fact that the federal government has not profited from Alaska supports the contention that the federal government generally subsidizes the West.

The results of his paper, he said, suggest new lines of inquiry in the history of the West, such as "has westward expansion been worth the price?"

Taking that a step further, "what have been the costs and benefit? Should expansion have been less or greater than it was. Should United States expansion continue? Should the United States shrink by cutting ties with its remaining possessions?"

Barker, who has never been to Alaska, said all this research has him considering further research into the value of Alaska, and the possibility of a book on the subject.

While Barker isn't convinced Alaska was a good deal, he acknowledged that the general reaction from Alaskans is that while the economics may not work, there are many other reasons the Last Frontier should be part of the United States.

"People feel Alaska is a beautiful place and they are happy it is part of the country," he said.

Alaskans, as a group, have what constitutes a spiritual allegiance to the 49th state, a devotion to the abundant natural resources, both renewable and non-renewable. Some speak of the wonder of its vast wildlife, including the moose, grizzly and polar bears, and the thousands of birds that migrate to Alaska annually.

Others note the days of the early gold rushes, and the modern day hunt for oil, gas and a host of minerals in the list of benefits.

Barker said he will continue to study the issue, and may at some point even plan a trip to visit the state.

Margaret Bauman can be reached at

margie.bauman@alaskajournal.com.