Culture & Art

Apr 1, 2016

How Alaska was sold

On 30th March, 1867, the agreement on the Russian sale of Alaska to the United States was signed in Washington. There are many myths about this sale of Alaska to the USA. Many believe it was sold by the Russian Sovereign Catherine II, while some believe it was not sold, but leased for 99 years and, during his ruling of the former USSR, Brezhnev refused to accept it back. We will now tell you how it happened.

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When feudalism was abolished in Russia, in 1861, Tsar Alexander II was forced to pay a compensation to landlords. To cover this cost Alexander II had to take a loan of 15 million pounds sterling from the Rothschild Bank, the following year. The loan would have a 5% yearly interest. Having to repay the foreign bank, the Tsar's younger brother, Grand Duke Konstantin Nikolaevich, proposed the Russian ruler to sell "anything unnecessary". After a lot of consideration, the Tsar decided that Alaska was useless.

The territory was added to the Russian Empire on the 21st of August, 1732 when an expedition, led by explorers Mikhail Gvozdev and Ivan Fyodorov first crossed the Bering Strait, towards the Aleutian Islands. The North American territory became the last Russian possession outside the Eurasian continent.

On a gloomy and overcast 16th December, 1866, Saint Petersburg was the stage of a very special meeting. In the room, Tsar Alexander II, the Grand Duke Konstantin Nikolaevich, the empire's Finance ministers, the Minister of Navy, and Baron Eduard A. Stoeckl, the Russian ambassador in Washington, USA, discussed a proposal to sell the Alaska territory to the United States of America. The group reached the decision to go forth with the sale for no less than 5 million dollars in gold. Six days later, on the 22nd of December, 1886, Russia's Emperor approved the territory's border, and Stoeckl presented the proposal to the then US State Secretary William Seward on March of the following year. The sale agreement was signed in Washington, on 30 March 1867. Alaska's 1 723 336 square meters were sold to the USA for a total amount of 7,2 million dollars in gold, which represents 4,18 dollars for km2.

This value was not enough to repay the entire Rothschild loan. As the pound sterling rate had sufficiently razed that time, so the amount of the loan taken had raised drastically. This was not good news for Tsar Alexander II neither for the Empire's finances. Still, the business was approved and payment followed suit.

The USA Government gave the Russian ambassador, Baron Eduard Stoeckl, a check for 7,320 million dollars, that included the 7,2 million for the purchase of Alaska, 21.000 were for the Baron, and the remaining was the payment to American senators who voted to rectify the purchase. The money to pay for Alaska had to be transferred to London, converted into pounds and then converted into gold bullion. This process led to a total loss of 1,5 million dollars. After this, the gold was shipped to Saint Petersburg, but the worse was still to come.

In a Twist of Fate, Russia Never Received the Money.

The gold was loaded onto "Orkney", the barque chosen for this service. While on its way to Saint Petersburg, the "Orkney" sank in mysterious circumstances on 16th July 1868. Some say that the gold was not on board and never left the United Kingdom. The insurance company in charge of the ship and cargo declared bankruptcy after the incident and the damage was only partly compensated.

Seven years later, in the morning of the 11th of December 1875, an event in Bremen shed a light on what happened on the "Orkney". While loading cargo and luggage bound for New York, a powerful explosion took place aboard the steamer "Mosel", killing 80 people and injuring another 120. Luckily, the cargo manifesto survived and, by five o'clock of that afternoon, the police had tracked and located the name of the owner of the exploded luggage. The man behind the explosion was an American citizen, named William Thomson.

When the police tried to arrest Thomson, he attempted to commit suicide. The poison he ingested failed to kill him at the moment, and he finally died of sepsis on 17th December. During this time, he confessed what he had done. According to documents, Thomson sailed from Bremen to Southampton and his luggage was to be later sent to the USA. The luggage should explode during the trip, so that Thomson could receive compensation for lost property. Nonetheless, the attack on the steamer "Mosel" wasn't the only one perpetrated by this American. He claimed to have sunk about a dozen ships, including the "Orkney" that carried the Russian gold.

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