In 1867 Alaska was sold to the United States by Russia’s for $7.2 million. How was this large amount of money transferred before currency was handled as it is today?

So this was a surprsingly interesting story. The simple answer—the US paid by check.

The mechanics of it were actually pretty similar to today—the Russian diplomat negotiating the purchase took the check to a bank and cashed it. The money was transferred by wire to a Russian account in London. From the National Archives:

In the mid-nineteenth century, U.S. government procedures for disbursing $7.2 million in gold appropriated by Congress for the purchase of Alaska were little different than procedures for disbursing $150 for the purchase of a desk. On July 28 Secretary of State Seward signed a requisition for a warrant, #4217, for $7.2 million in gold from the Treasury Department. On July 29, L. L. Smith, the first auditor of the treasury, established an account, #165,615, and signed a report approving the payment of $7.2 million to the Emperor of Russia and sent it to the comptroller of the treasury. The comptroller and the register of the Treasury Department, the government's chief bookkeeping official, then certified the report. The register of the treasury wrote an order on the U.S. treasurer, an appropriation warrant. The treasurer, in turn, authorized the transfer of the funds to a departmental disbursing agent, who was accountable for the proper use of the money. On August 1 the agent wrote a draft in that amount, a pay warrant, payable to Edward de Stoeckl. Stoeckl endorsed the draft over to Riggs Bank with instructions to Riggs to pay the money to Russia's bank for foreign accounts, the London office of Baring Brothers and Company. Riggs, who charged a fee of $3,600 for his services, sent only $7,035,000 to the Baring office in New York. Stoeckl authorized Riggs to pay Robert J. Walker $26,000 in gold for his lobbying services.

The swirl around the basic mechanics of payment get interesting. First, there were a lot of accusations of corruption associated with the deal involving the $139,000 left over from the money sent to Russia and the money paid to the main lobbyist. As the Archives article notes, a Congressional investigation came to no strong conclusions, but there is some evidence at the time that money was paid to member of Congress. Ronald J. Jenson, author of The Alaska Purchase and Russian American Relations (1975), concluded that $100,000 was disbursed to members and another $10,000 was supposed to go to Thaddeus Stevens, but he died first.

There is also a persistent Russian conspiracy theory that Russia never received payment. The gist is that the ship carrying the gold from London sank, with variants of the story adding an air of conspiracy and theft with claims no gold was found in the wreck, or that a former Confederate saboteur was somehow involved.

I couldn’t find any formal English-language research on it, but someone here found a Russian journal article by a historian who found evidence in the Russian archives. The money apparently was spent overseas to pay for railroad construction supplies. Here is the Google translation of A. Yu. Petrov’s article from the 2002 edition of the journal Amerikanskii Ezhegodnik (American Yearbook), “Money received after Alaska Purchase were spent on the Rail Road Construction in Russia”:

The document was compiled by one of the employees of the Ministry of Finance in the second half of 1868. It turned out that reality has little to do with some beautiful and utopian reasoning. The document reads:

"For the Russian territories in North America ceded to the North American States, 11,362,481 rubles 94 were received from the designated States [kop.]. Of the 11,362,481 rubles, 94 kopecks were spent abroad for the purchase of railroad accessories: Kursk-Kiev , Ryazan-Kozlovskaya, Moscow-Ryazan and others 10 972 238 rubles 4 to the rest of the same 390 243 rubles 90 to arrived in cash "profits