As the colony expanded, Baranov looked for a location to build a new capital for Russian-America. He wanted to expand east along the Pacific coastline into Southeast Alaska. The primary reason was to find new sea otter hunting grounds, as the sea otter populations of Cook Inlet and Prince William Sound were sharply declining from over-hunting. The resistance from Athabaskan Dena'ina in Southcentral Alaska also forced Baranov to look further east.
Baranov was also concerned with increasing British activity, which he wanted to preempt. After Cook's voyage, British merchants on the China coast sent a ship to Alaskan waters in 1785. It returned with 560 otter pelts that sold for $20,600. This voyage started a serious competition for Alaska's fur trade. By the 1790s, several British and American ships were coming into Alaska waters each year to trade for furs.
In 1795, Baranov sailed to the Southeast to reconnoiter a site for a new settlement. He was immediately taken with Sitka Sound. It had a large bay with a good harbor for ships, a temperate climate, abundant forests, good soil, and plentiful game and fish. But this was also the heartland of the Tlingit.
The first step towards Sitka was to build a settlement at Yakutat, a large bay about halfway between the Russian post in Prince William Sound and Sitka. In 1796, Baranov founded a farming settlement of 192 people there named Slavorossiya (New Russia). Besides a staging base to move into Sitka, the goal was to produce food for the colony, something that was a chronic shortage.
With the Yakutat settlement, the Russians entered Tlingit territory for the first time. Baranov negotiated the rights to use an island there from the local Tlingit chief. But life in this new settlement was difficult. Most of the settlers were serfs or convicts from Russia forced to come to Alaska. And they had difficulty adapting to Alaska and their new Tlingit neighbors.
Sitka Sound