Hi
Is there some disagreement the dollar amount paid by the US government for the Louisiana territory in 1803?
The amount I’ve always seen is 15 million (or 4 cents on the dollar). I’ve never seen it in francs until I opened the link below.
This link says
“U.S. finally paid $23,213,568”
What was the official amount paid to France? And how much would it be in US dollars today?
I look forward to your feedback.
davidmich
The Louisiana Purchase was an incredible deal for the United States, the final cost totaling less than five cents per acre at $15 million (about $283 million in today’s dollars). France’s land was mainly unexplored wilderness, and so the fertile soils and other valuable natural resources we know are present today might not have been factored in the relatively low cost at the time.
Sorry I miswrote. I meant to write 4 cents per acre. But I would be interested to know if anyone else has seen inconstancies and why that is.
Sorry I miswrote. I meant to write 4 cents per acre. But I would be interested to know if anyone else has seen inconsistencies and why that is.
Interest. From here
Zut your link states “less than 3 cents an acre”. Most sources I’ve seen state less than 4 cents an acre. It’s a significant difference when you add it up.
The direct purchase cost was under three cents an acre (about 2.8 cents). The financed cost ($23 million) equates to 4.3 cents per acre (828,000 square miles is 529,920,000 acres). So France sold the Lousiana Territory for less than 3 cents per acre but we effectively paid more than that. In reality, we didn’t, because 6% is a pretty good interest rate, but history books are rarely troubled by present value conversions.
6% has been a pretty good interest rate for most of our lives. Rates are much lower now. It wasn’t a great rate in 1800. Interest rates are determined by three things primarily: (i) the expected real rate of growth, (ii) the expected rate of inflation, and (iii) default risk. I don’t know what (i) was back then for the U.S. Looking back it was quite high, but that easily might not have been imagined. (ii) was pretty low as we and most countries were on a gold standard. (iii) is essentially zero now for the U.S. as we can always print money to pay off debt. Back in 1800 the dollar was redeemable in gold which we could not print. The UK’s borrowing rate in 1800 was about 5% so the US had a default premium of about 1%.
So the US government borrowed $ 15 million(+) at 6% interest rate. Who bought the US bonds? Would those bonds have been issue to mostly European countries or other states? What kinds of bonds were they? I’ve searched that information but couldn’t find any specifics.
“Negotiations moved swiftly, and at the end of April the U.S. envoys agreed to pay $11,250,000 and assumed claims of its citizens against France in the amount of $3,750,000.”