Russian presence in south central Alaska was well-established in the 19th century. In 1867, U.S. Secretary of State William H. Seward brokered a deal to purchase Alaska from Imperial Russia for $7.2 million, or about two cents an acre ($0.1 billion in 2016 dollars). His political rivals lampooned the deal as "Seward's folly," "Seward's icebox," and "Walrussia." In 1888, gold was discovered along Turnagain Arm.
The tent city (called "The White City" in the handwritten caption) in Ship Creek, photographed by Alberta Pyatt on July 1, 1915.
Alaska became a United States territory in 1912. Anchorage, unlike every other large town in Alaska south of the Brooks Range, was neither a fishing nor mining camp. The area surrounding Anchorage lacks significant economic metal minerals. A number of Dena'ina settlements existed along Knik Arm for years. By 1911 the families of J. D. "Bud" Whitney and Jim St. Clair lived at the mouth of Ship Creek and were joined there by a young forest ranger, Jack Brown, and his bride, Nellie, in 1912.
The city grew from its happenstance choice as the site, in 1914, under the direction of Frederick Mears, of a railroad-construction port for the Alaska Engineering Commission. The area near the mouth of Ship Creek, where the railroad headquarters was located, quickly became a tent city. A town site was mapped out on higher ground to the south of the tent city, greatly noted in the years since for its order and rigidity compared with other Alaska town sites. In 1915, territorial governor John Franklin Alexander Strong encouraged residents to change the city's name to one that had "more significance and local associations". In the summer of that year, residents held a vote to change the city's name; a plurality of residents favored changing the city's name to "Alaska City." However, the territorial government ultimately declined to change the city's name. Anchorage was incorporated on November 23, 1920.
Construction of the Alaska Railroad continued until its completion in 1923. The city's economy in the 1920s and 1930s centered on the railroad. Col. Otto F. Ohlson, the Swedish-born general manager of the railroad for nearly two decades, became a symbol of residents' contempt due to the firm control he maintained over the railroad's affairs, which by extension became control over economic and other aspects of life in Alaska.
Fourth Avenue in 1953, looking east from near I Street. Just ten years before, the retail area shown in the foreground was mostly an industrial area, housing lumber yards and similar uses.
Between the 1930s and the 1950s, the city experienced massive growth as air transportation and the military became increasingly important. Aviation operations in Anchorage commenced along the firebreak south of town (today's Delaney Park Strip), which residents also used as a golf course. An increase in air traffic led to clearing of a site directly east of town site boundaries starting in 1929; this became Merrill Field, which served as Anchorage's primary airport during the 1930s and 1940s, until Anchorage International Airport replaced it in 1951. However, Merrill Field still sees a significant amount of general aviation traffic.
Elmendorf Air Force Base and Fort Richardson were constructed in the 1940s, and served as the city's primary economic engine until the 1968 Prudhoe Bay discovery shifted the thrust of the economy toward the oil industry. The 2005 Base Realignment and Closure process led to the combining of the two bases (along with Kulis Air National Guard Base) to form Joint Base Elmendorf-Richardson.
On March 27, 1964, the magnitude 9.2 Good Friday earthquake hit Anchorage, killing 115 people and causing $116 million in damages ($0.70 billion in 2016 dollars). The earth-shaking event lasted nearly five minutes; most structures that failed remained intact for the first few minutes then failed with repeated flexing. It was the world's second-largest earthquake in recorded history. Rebuilding dominated the remainder of the 1960s.
In 1968, ARCO discovered oil in Prudhoe Bay on the Alaska North Slope, and the resulting oil boom spurred further growth in Anchorage. In 1975, the City of Anchorage and the Greater Anchorage Area Borough (which includes Eagle River, Girdwood, Glen Alps, and several other communities) merged into the geographically larger Municipality of Anchorage The city continued to grow in the 1980s, and capital projects and an aggressive beautification campaign took place. During this time Anchorage became known as the "Green Apple of the Arctic."
Several attempts have been made to move Alaska's state capital from Juneau to Anchorage – or to a site closer to Anchorage. The motivation is straightforward: the "railbelt" between Anchorage and Fairbanks contains the majority of the state's population. Robert Atwood, owner of the Anchorage Times and a tireless booster for the city, championed the move. Alaskans rejected attempts to move the capital in 1960 and 1962, but in 1974, as Alaska's center of population moved away from Southeast Alaska and to the railbelt, voters approved the move. Communities such as Fairbanks and much of rural Alaska opposed moving the capital to Anchorage for fear of concentrating more power in the state's largest city. As a result, in 1976 voters approved a plan to build a new capital city near Willow, about 70 miles (110 km) north of Anchorage. In the 1978 election, opponents to the move reacted by campaigning to defeat a nearly $1 billion bond issue to fund construction of the new capitol building and related facilities ($3 billion in 2016 dollars).. Later attempts to move the capital or the legislature to Wasilla, north of Anchorage, also failed. Anchorage has over twice as many state employees as Juneau, and is to a considerable extent the center of state and federal government activity in Alaska.