Fur Economy

It is important to remember that Russian-America was, more than anything else, a business. Outside of the failed attempt at Yakutat, there was never an intent to settle Russians in Alaska. In fact, Russians were barred from migrating there unless employed by the company. After the creation of the Russian-American Company in 1797, the company and the colony became one and the same.

Like most businesses, their principal goal was to make a profit, preferably a large one. During the Baranov era, the Russian-America Company did that. Between 1806 and 1818, Alaska produced 15 million rubles in fur sales. As a point of reference, 1 ruble was worth approximately $10 today. So Alaska, during those 12 years, produced the equivalent of 150 million dollars worth of fur sales! Shareholders were paid a handsome dividend of 500,000 rubles of profit each year. At its opulent headquarters in St. Petersburg, the company's board of directors received an annual salary of 15,000 to 25,000 rubles, with bonuses as high as 100,000 rubles. 

But this prosperity was not sustainable. Each time the company entered a new area, it sought to maximize its profit by harvesting as many sea otters as possible. Within a few years, the sea otter population would crash from overhunting, pushing fur hunters further onto new grounds. This quest for new hunting grounds largely drove the colony's expansion. But by the end of the Baranov era, the Russians had run out of new hunting grounds. After 1820, the average sea otter harvest was 1/3 of what it had been a decade earlier. At the same time, the profitable fur seal trade on the Pribilofs was facing similar over-hunting problems, with annual harvests down by over 1/2.

The Russians recognized the need for conservation measures. A quota was placed on how many sea otters could be taken from a district, there was a prohibition on killing females or pups, and hauling grounds were protected. On the Pribiliofs, harvesting was restricted to set times and males of certain ages. But the depletion of sea otters continued. By the end of the Russian era, sea otters had been killed off from most of their range and were close to extinction. Sea otters would disappear from Southeast Alaska until they were reintroduced in the 1960s.

With the decline in sea otters and fur seals, Russians looked to land animal furs, such as beavers, bears, foxes, and river otters, to make up for the lost profits. But land animal furs were worth less than the dense furs of sea mammals. There were also increased costs as Russians needed to build and maintain new inland fur trading posts. The changing focus to the land fur trade led to Russian expansion into Northern and Interior Alaska during the later part of the Russian era.

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