Alaska, America’s 49th state, has now celebrated the 50th anniversary of its admission to the union. With 16% of the nation’s land area and just .23% of its population, Alaska is a state created by a federal government that it now often resents, and it is an individualistic society that has responded to its unique situation in creative ways. Alaska would not be American at all but for the expansive dream of Secretary of State William Seward, who took advantage of a fleeting opportunity to create an American Pacific empire by purchasing the region from Russia in 1867 for $7.2 million. (The Russian Orthodox Church still claims 30,000 members in Alaska, many of them Alaska Natives.) The Alaska Territory owed most of its early growth to decisions made by the federal government. It started growing feverishly with the Klondike gold rush in 1897, just as President McKinley reaffirmed the gold standard. Anchorage, the largest city, had its beginnings in 1913 as the chief worksite of the federal government’s Alaska Railroad, completed in 1923. The Army built the Alcan Highway, connecting Alaska to the lower 48 states, in the grim war days of 1942, when the Aleutian Islands off the Alaska Peninsula were invaded by the Japanese, the only part of the United States occupied by a foreign enemy since the War of 1812. By 1943, 152,000 U.S. troops were stationed here, in a territory whose prewar population was only 72,000. Alaska is the only state abutting Russia, across the Bering Strait and over the North Pole, and even today Alaska remains strategic. The military remains a major presence at Fort Richardson and Elmendorf Air Force Base near Anchorage and at Fort Wainwright and Eielson Air Force Base near Fairbanks. The Pentagon in 2004 installed interceptors for the national missile defense system at Fort Greely.

Alaska’s size remains hard for Americans to comprehend. If superimposed on the lower 48, the state would stretch from Florida to California. The westernmost Aleutians are closer to Tokyo than to Juneau and farther west than Wellington, New Zealand. One-third of Alaskans have no access to state roads and are reachable only by boat or airplane. Alaska has, per capita, six times the number of pilots and 16 times the number of aircraft as the rest of the nation, as well as 722 registered airports. The wild is always nearby. Moose walk around residential neighborhoods in Anchorage, and a much higher rate of people go missing here than in the lower 48, or simply “Outside” as Alaskans say. Only 686,000 people live in Alaska, with 61% in Anchorage and (by Alaska standards) the nearby Kenai Peninsula and Matanuska-Susitna Valley. This is the fastest-growing part of Alaska, with a dynamic private-sector economy. Fairbanks, with 13% of the population, is a pipeline and mineral service center deep in the interior, unprotected from Arctic winds in winter and giant clouds of mosquitoes in the brief but hot summer. The Panhandle, with 11% of the people, is the old Alaska, with towns settled by Russians and the old state capital of Juneau built up against steep mountains on inlets from the Pacific. The other 15% live in the bush, scattered in small towns and the oil port of Valdez, in Native settlements and on hundreds of lakes. About half the people here are Alaska Natives. They are greatly outnumbered and outvoted on many issues, and yet are the object of awed respect for their achievement in building viable civilizations with impressive art traditions in such a forbidding environment. Considering its remoteness, Alaska has impressive racial diversity. Its population is 4% black, 13% Native, 5% Asian, and 6% Hispanic.

Alaska won statehood in January 1959, after a valiant campaign. But statehood did not end federal decision-making power over Alaska—or the widespread resentment of it. Alaska’s economy depended on fishing, oil production in Cook Inlet around Anchorage, and the military—all federally regulated or controlled. Less than a decade later, however, Alaska’s economy and public life were reshaped by the discovery of North Slope oil. It began suddenly, accidentally. On the day after Christmas 1967, at Prudhoe Bay on the Arctic coast, a tremendous roar as loud as four jumbo jets drew a crowd of 40 men, heavily clothed against the 30-below weather, to an oil rig. A natural-gas flare shot 30 feet straight up. This was the great 12 billion-barrel North Slope oil field. Earlier, oil companies had drilled seven dry wells on Prudhoe Bay, and Arco chief executive Robert Anderson wouldn’t have ordered this last try, except that he had a drilling rig nearby. This was the greatest oil strike in U.S. history and the beginning of much of today’s Alaska.

Finding oil in Prudhoe Bay was somewhat akin to finding it on the moon. It was not clear in 1967 who owned the oil or how it could be taken out. The Statehood Act of 1959 gave the state the right to choose its own public lands, but only after settling Native land claims. The only feasible way to get the oil out—the Arctic Ocean ice breaks up in late July for only six weeks—was a pipeline. But environmentalists opposed that option for fear it would destroy the delicate permafrost and interfere with caribou migrations. Development-minded Alaskans got a pipeline bill through Congress in 1973, by just a one-vote margin in the Senate, but the pipeline had to be built on stilts and wasn’t opened until 1977. Then in 1980, after astute lobbying by environmentalists, Congress passed—over the objections of Alaska’s two senators and Rep.-at-Large Don Young—the Alaska Lands Act, which set aside 159 million acres as national parks, national monuments, or wilderness: One-third of the state was protected (or barred) from development. Much, if not all of this, turned out to be for the best. The pipeline came on line just as oil prices were approaching a peak, thus generating maximum revenues to the state, which gets 100% of the royalties. The environment was protected much better than it would have been without the environmentalists’ safeguards—although a corroded transmission line caused a major oil spill in March 2006. The caribou herd has risen from 3,000 animals to 32,000, and Native Alaskans got more autonomy than the non-Native majority of Alaskans would have given them. With oil providing some 85% of its revenue, the state government abolished its income tax in 1980 and created a low-tax regime that has helped Alaska to grow even as oil revenues and military spending declined.

Wisely, Alaska did not squander its windfall. In 1976, Republican Gov. Jay Hammond persuaded the Legislature to establish a Permanent Fund for most of the oil revenues. Each year, it presents every resident with a dividend of 20% of the average of profits for the preceding five years—$2,069 in 2008. Even though $14.3 billion has been paid in dividends, most of the money has been invested. The North Slope is producing less than half as much oil as in the late 1980s, but the Permanent Fund’s market value was $28 billion in April 2009, and most of its income now comes from investments rather than oil. Some speculated that Alaska voters would pressure legislators for bigger payouts. But Alaskans have acted like investors. They want their dividend checks not just now but in the future. The Legislature and the voters have rejected proposals to spend Permanent Fund earnings, and no one has dared to suggest tapping the capital.

Similarly, 12 regional Native corporations created by the Alaska Native Claims Act have proved to be successful not just in providing income for Natives but in helping them preserve Native traditions and adapt to Alaska’s market economy at their own pace. On Indian reservations in the lower 48, all land is held by the tribe and supervised by the government; elections held on the political model have produced a winner-take-all politics that is often corrupt and incapable of pursuing long-range strategies. The corporate model, on the other hand, allows more continuity in office for the Alaska Native corporations’ managers—although some have made bad decisions and been thrown out. But the cumulative voting method, by which a minority can get a seat on the board, has produced management that is sensitive to all opinions. Huge windfalls are avoided because 70% of profits from mineral sales are shared by all corporations. The corporation itself, not a distant federal bureaucracy, is left with the choice of how much ancestral land to retain and how much to exploit economically. Individual Natives can make the transition from their traditional communal economy, living on subsistence fishing and hunting, or make their way in the market economy: 43% of Natives now live in Anchorage, Fairbanks, Juneau, Matanuska-Susitna, or the Kenai Peninsula. In 2004, the 42 regional and village Native corporations had revenues of $4.5 billion and employed 13,000 Alaskans. But not all is rosy. Native villages in the bush have little in the way of a private-sector economy, and alcoholism and suicide rates remain high.

The federal government continues to make decisions that shape Alaska’s economy—and not always in Alaska’s favor, despite the clout of the long-serving Alaska delegation: Sen. Ted Stevens, who was in office from 1968 until he lost re-election in 2008; GOP Sen. Lisa Murkowski, the daughter of former Sen. Frank Murkowski (1981-2002); and Young, in office since 1973. All three are Republicans. They failed to get approval of oil drilling in a sliver of the Arctic National Wildlife Refuge—an area the size of Washington’s Dulles International Airport in an area the size of Delaware—although it was on the verge of being approved in 1989, when the Exxon Valdez ran aground in Prince William Sound in March 1989. Environmental groups have made ANWR oil drilling one of their main issues in their direct-mail fundraising even though ANWR is estimated to have 9 billion to16 billion barrels of oil, the most by far in any untapped U.S. oil field. In 2005 and 2006, the Senate approved ANWR drilling as part of its budget resolution, but that was stricken by the House when liberal Republicans threatened to withhold their votes. The Democratic takeover of both chambers in the 2006 elections probably killed the issue in Congress.

Although the North Slope’s oil has been pumped out through the pipeline since 1977, there has been no way to get its vast quantities of natural gas out. So it’s been burned off at the wellhead or pumped back into the ground. An estimated 30 trillion cubic feet is in Prudhoe Bay and another 70 trillion cubic feet is elsewhere on the Slope. In October 2004, after years of effort, Stevens and Republican Sen. Lisa Murkowski got an 80% federal loan guarantee for a gas pipeline through Congress. That left the ball in the state government’s court. Then-Gov. Frank Murkowski accepted two proposals—one from the three North Slope oil companies and another from a pipeline company with Native corporations involved—to build the pipeline, and he urged that the state take an equity interest in the project. But Sarah Palin, then-mayor of Wasilla, and others argued that this was a giveaway to the oil companies. It became the issue that enabled Palin to defeat Murkowski 51%-19% in the August 2006 Republican primary, with 30% going to a third candidate. She went on to defeat former Democratic Gov. Tony Knowles in November, and, working with the Legislature, enacted the Alaska Gasline Inducement Act, which offers up to $500 million in seed money to help build the natural-gas pipeline as well as freeze production taxes for 10 years. The state received five applications to build a gas pipeline, none of them from the North Slope oil producers, and in August 2008, Alaska approved a bid from Calgary-based TransCanada. It was a major victory for Palin.

Alaska’s economy is also dependent on fishing, long its largest private employer. Alaska produces half of America’s seafood, and the salmon fisheries here, unlike so many elsewhere, have not been dangerously depleted. Tourism, the No. 2 private employer, is on the rise, with over 1.5 million tourists a year, many arriving on cruise ships from which they view glaciers in the southeast, troop into Russian-settled Sitka, and make side trips to Denali National Park and Mount McKinley. In August 2006, voters by just 52%-48% approved a $50 per passenger cruise ship tax; the ballot proposition also taxed gambling revenues in Alaskan waters and required environmental observers to monitor the ships. The Anchorage airport, near the top of the world, is seven hours from New York City, Tokyo, and London, and it is a major cargo transfer point for UPS, FedEx, Northwest Airlines, and the U.S. Postal Service. More wide-bodied, all-cargo aircraft move through it than any other U.S. airport.

Sarah Palin’s election in 2006 was one of several earthquakes that reshaped Alaska’s political landscape. That year, three state legislators were convicted of bribery. Bill Allen, head of the oil field services company VECO, was handing out $100 bills to legislators to get them to vote against higher taxes on oil companies. The scandals didn’t stop there. In 2007, Rep. Young was revealed to be the target of an investigation involving Rick Smith, the former head of VECO and a major Young contributor. In June 2007, The New York Times reported that a Young aide altered the 2005 transportation bill with a $10 million addition for roadwork on Interstate 75 near Naples, Fla., that would help real estate developer Daniel Aronoff, who had raised $40,000 for Young. After yet another federal probe, Sen. Stevens was indicted on charges of concealing $250,000 in gifts from VECO and Allen, including extensive renovations on his home. But his conviction was thrown out in March 2009 because prosecutors had withheld key evidence from Stevens’s defense attorneys.

Going into the 2008 election, Stevens and Young had 75 years of seniority in Congress and spent much of that time bringing money back to Alaska. In the 1970s, Stevens had done yeoman work in shaping the Alaska Native Claims Act and as a senior Republican on the Appropriations Committee, he had sponsored construction, highway, sewer, and harbor projects on the state, to the point where federal dollars became known in Alaska as “Stevens money.” Anchorage airport was named for him. Young, from his positions as chairman of the Resources Committee (1995-2001) and Transportation Committee (2001-07), fought for oil and gas exploration and sponsored countless infrastructure projects. Most famous, not just in Alaska but nationally, was the “Bridge to Nowhere,” as critics called it, between Ketchikan and Gravina Island (pop. 50, plus the local airport), to the tune of some $250 million in the 2005 transportation bill. More than anything else, the “Bridge to Nowhere” tarnished the Republican Congress with a reputation for out-of-control pork-barrel spending and contributed to the Democratic takeover in 2006.

Young managed, barely, to survive the 2008 election, narrowly winning in the August primary over Lt. Gov. Sean Parnell, 45.5%-45.2%. Then, despite trailing in the polls, he defeated Democrat Ethan Berkowitz 50%-45% in November. Stevens did not fare as well. In November, he lost 48%-47% to Anchorage Mayor Mark Begich, a Democrat. His defeat at age 84 marked the end of an era in Alaska, leaving the state with two of the most junior senators, Begich and Republican Lisa Murkowski. Young remained in the House, but not with the clout he once had.

In partisan terms, Alaska is pretty Republican. Begich is the first Alaska Democrat elected to the Senate since 1974. His father, Nick Begich, who died in a plane crash with House Majority Leader Hale Boggs in 1972, was the last Alaska Democrat elected to the House. Yet in the Legislature, divisions are not always along party lines. Palin worked more with Democrats than with Republican leaders on the natural-gas pipeline and tougher ethics laws. And, anyway, Alaska is quirky. During the 2008 presidential campaign, liberal commentators portrayed Palin as a religious zealot. But Alaska has the lowest church attendance in the nation and a libertarian streak—people don’t move all the way there to let other people tell them how to live their lives. As a candidate and public official, Palin has never pressed for restrictions on abortion rights or for banning same-sex marriage. Oil company workers in their two-week stints on the North Slope are not allowed to have alcohol, illegal drugs, or guns. But don’t try to take those things away from Alaskans when they’re back home. Arguments that seem so consuming in the lower 48 seem beside the point in Alaska, where the wilderness is always nearby and the possibilities for the future seem limitless.