The Louisiana Purchase

President Thomas Jefferson wrote to a fellow scientist in late January 1804, that “I confess I look to the duplication of area for extending a government so free and economical as ours, as a great achievement to the mass of happiness which is to ensue.” Just nine months earlier the President’s representatives in Paris had bargained successfully with Napoleon’s bureaucrats not only to buy the port of New Orleans, then the keystone of the continent, but also to acquire, at three cents an acre, an area extending from the Mississippi River to . . . where? No one knew until Meriwether Lewis stood at the crest of the Rocky Mountains at a place known today as Lemhi Pass, on 12 August 1805.

Expansion of the American experiment created wonderful opportunities for the nation and daunting challenges for Jefferson and his circle. In the late summer of 1804, Lewis and Clark named the three rivers they deemed the sources of the Missouri River in honor of the team at the pinnacle of contemporary American statesmanship: the President himself, Secretary of State James Madison, and of the Treasury Albert Gallatin.

Gallatin’s frugality and financial acumen made possible payment to France. Moreover, he pointed out that since the Constitution did not specifically deny the President authority to make the purchase, the transaction would be legal. Ever since then, the “doctrine of implied powers” has been a key element in presidential policy around the world.

Madison faced an unhappy Spain because that government had been assured by the French that it would never alienate Louisiana—nor throw the Roman Catholic creole population of New Orleans into the prison of American protestantism. He also coped with Napoleon’s on-again, off-again attitude regarding the sale. Most importantly, he had been the President’s confidant and support in the long planning stages.

President Jefferson was one of those western-looking aristocrats who believed that the United States should people all America. Also, he was well aware that France, Spain, and Britain also had designs on the land, people and resources west of his own republic. When his representatives, Meriwether Lewis and William Clark, set out to trace the lineaments of the Missouri River, their objective would be the debouchure of the river already named by an American explorer-trader for the popular symbol of American empire—Columbia.

With the purchase of Louisiana, the nest of nationhood would extend from the Atlantic Ocean to the Rocky Mountains, but Liberty’s Rainbow arched from sea to shining sea.

Spain, France, and England had now and then regarded the youthful republic as a potential ally, or at least a quiet neutral. President Jefferson had worked to establish a foreign policy that would play them against one another and reflect the position he had set forth so succinctly in his first inaugural address: “We see no enemies at home or abroad; we spend little to protect ourselves and we mind our own business.”

Madison directed foreign policy along pacific lines also, and Gallatin had minded business so well that the country enjoyed good credit, a bit of budget surplus, and excellent connections with major bankers at home and abroad.

Easter week in Paris, 1803, was truly momentous for the young United States of America. The American Minister to France, Robert R. Livingston, was deep in negotiations—initiated by direct command of the First Consul, Napoleon Bonaparte^[1]In post-revolutionary France, the maelstrom of domestic intrigue and international strife resulted a series of new governments, including, in 1795, a five-man executive committee called the … Continue reading—to discuss the difficult question of New Orleans, the Mississippi and Franco-American relations. A springtime warmth suffused the international atmosphere.

Livingston had been sent to Paris, in Jefferson’s words, because “the cession of Louisiana and the Floridas by Spain to France works most sorely on the United States.” Spain had held the territory since the end of the Seven Years War (1756-63), or the French and Indian War, as Americans termed it. In secret moves culminating in the Treaty of San Idelfonso, France had reclaimed the area in 1800, but left Spanish officials in charge. For a time, Spain had allowed unfettered commercial traffic on the lower Mississippi River, but royal pique toward both the U.S. and France had led to an abrupt, threatening closure of the river: New Orleans was no longer open to American ships, and Americans west of the Alleghenies were landlocked. Jefferson immediately dispatched his Virginia protégé, James Monroe, to Paris to reinforce Livingston. Monroe arrived at Le Havre on Good Friday 1803. On Easter Sunday Napoleon, 100 miles away in Paris, learned of his arrival by semaphore.^[2]Semaphore was a long-distance visual telegraph system invented and named by Claude Chappe in 1794, during the French Revolution. A similar system, developed in 1795 in England, was used in the U.S. … Continue reading

Napoleon possessed an agile mind, imperial demeanor, and an enormous need for money. If the sale of a territory he already considered to be American could bring in some ready cash, why not sell it? These thoughts crystallized at High Mass on that Easter Sunday. Completing his worship, he called for his minister of the treasury, Marquis François Barbé-Marbois (barb-mar-bwah). Marbois had served in the U.S. and married an American woman, and was a good friend of Jefferson, partly because of his friendships in the United States.

Napoleon made it clear that he wanted to sell the whole of Louisiana to the Americans. “They only ask of me one town in Louisiana, but I consider the colony as entirely lost.” He was referring to the ongoing American settlement in the Mississippi valley; to his devastating losses in his attempt to reinstate slavery in Haiti; to the might of the British navy, which controlled access to the New World; and to Jefferson’s wish to purchase at least a small piece of land near New Orleans where goods coming down the Mississippi could be deposited for transfer to seagoing ships.

At midnight, 13 April, Livingston sent a dispatch to Madison: “I have just come from the Minister of the Treasury [Marbois]. Our conversation was so important, that I think it necessary to write it.” Livingston and Monroe committed their country to pay France sixty million francs for the Louisiana Territory and twenty million to settle claims American merchants and shippers had lodged against France after the short, bitter naval near-war of 1799. The Mississippi, New Orleans, the vast lands west of the river and the Gulf Coast eastward^[3]This was a misunderstanding. The French had no claim to most of the eastern Gulf Coast, nor Florida. During Monroe’s presidency, Spain was persuaded, partly by General Andrew Jackson’s … Continue reading were going to be American. Livingston concluded his dispatch: “every moment is precious.”

Indeed it was. Negotiations between the Americans and the French went on for a month; they would have taken at least three months had Livingston and Monroe taken the time to communicate with Washington, D.C. Just a few weeks after that business was concluded, war again erupted between France and England. Old Europe continued to tear itself apart. The American people had taken a giant step toward realizing a cherished dream.

Three documents were transmitted detailing the sale and purchase of Louisiana. Each is covered with purple velvet embroidered with silver and gold thread and white silk appliqué. The initials in the center stand for “Peuple Francais”—The People of France. The object attached by the braided cord, called a skippet, contains the seal of the French government impressed in wax.

The treaty of cession is written both in French and English on both sides of three sheets and one side of a fourth, measuring 9-5/8 inches by 14-3/8 inches. Article I declares, in part:

The First Consul of the French Republic desiring to give to the United States a strong proof of his friendship doth hereby cede to the United States in the name of the French Republic for ever and in full Sovereignty the said territory with all its rights and appurtenances as fully and in the Same manner as they have been acquired by the French Republic.

The convention, or international agreement, for payment is written on both sides of one sheet and one side of a second. Article I states:

The Government of the United States engages to pay to the French Government in the manner Specified in the following article the sum of Sixty millions of francs independent of the Sum which Shall be fixed by another Convention for the payment of the debts due by France to citizens of the United States.

The claims convention, pictured above and on the next page, is written on both sides of three sheets. Article I reads:

The debts due by France to citizens of the United States contracted before the 8th Vendémiaire^[4]The first month of the calendar inaugurated in 1792 by the short-lived First French Republic. In the Gregorian calendar, used elsewhere throughout Europe and North America, Vendémiaire extended from … Continue reading ninth year of the French Republic/30th September 1800/ Shall be paid according to the following regulations with interest at Six per Cent; to commence from the period when the accounts and vouchers were presented to the French Government.

All three document are signed by Robert Livingston, James Monroe, François Barbé-Marbois, and Bonaparte.

Article 13 Transcript

The present convention Shall be ratified in good and due form and the ratifications Shall be exchanged in Six months from the date of the Signature of the Ministers Plenipotentiary, or Sooner if possible.

In faith of which, the respective Ministers Plenipotentiary have signed the above Articles both in the French and English languages, declaring nevertheless that the present treaty has been originally agreed on and written in the french language, to which they have hereunto affixed their Seals.

Done at Paris, the tenth of Floreal, eleventh year of the French Republic. 30th April 1803.

[Signatures]

For a brief period from October 1801, through the middle of May 1803, Napoleonic France and the Great Britain of George III shared an uneasy peace. Mutual mistrust fed an appetite for building up armies and navies. Expenditures in turn fueled a great need for hard cash. The French had wasted thousands of men and vast sums trying to re-shackle the recently freed slave population in Haiti. That old imperial dream died hard. Napoleon needed cash to prepare for the looming war with England and her continental allies. His decision to sell not just the city of New Orleans and a duty-free port to Americans, but to convey the whole Louisiana Territory to the new democracy, was part of his strategy to raise funds for a new war and perhaps to acquire an ally. There were many uncertainties in the air—Napoleon was besieged by those who wished to restore the old colonial empire, or who wished him to renege on his promise to sell the Louisiana Territory.

President Jefferson and Albert Gallatin faced the challenge of delivering enough money to Paris to satisfy the First Consul’s appetite, and to do it promptly. They issued certificates of public debt, or stocks.^[5]Noah Webster, in his Compendious Dictionary of the English Language (published in 1806), defined a stock as ‘property or interest in a joint capital or fund,’ and bond as simply ‘an … Continue reading Stocks would be sold in various denominations at six percent. However, no French banking house would serve as intermediary in the transaction, for fear of British blockade and seizure. Marbois turned to the London-based merchant bankers, the House of Baring. It was a well known Anglo-American firm with strong ties to a major continental house and would be acceptable to all parties.^[6]The House of Baring had a long, close connection with the government of the United States. Following World War II it evolved into an investment bank with global interests. In a spectacular example of … Continue reading Sir Francis Baring, scion of the house, in turn relied upon his son-in-law Pierre Cesar Labouchere, a partner not only in Baring but also in the prestigious Hope and Company of Amsterdam. The Dutch conduit would make prompt payment in Paris possible. Alexander, Sir Francis’ second son, would handle the American end of the deal. Alexander had married Anne Louisa, the daughter of Henry Bingham, the richest man in America. The two younger men worked out the details. It was a tidy family arrangement. Strikingly, it was not a major challenge for these veteran financiers. Both had worked in this entangled international money market for some time.

Thus it was that a London banking firm sold American stocks on an international market to help France finance a renewed war with Great Britain.

Complications

Notice that the stock certificate is dated 12 July 1809, six years after the Louisiana Purchase Treaty was signed. In late spring of l803 both France and England were preparing to renew hostilities. Barings Bank, founded in London in 1762, was given the task of selling the majority of the stocks to fund the purchase. As hostilities spread and France occupied Holland, major partners in Hope and Company removed to London also. Napoleon was aware that capital was critical to his war effort and so he gave assurances that Hope and Company would be free to conduct business without duress if they would return to Amsterdam. The stocks there however were already sold and Dutch investors were invited to purchase any available in London. It would appear that the stock certificate illustrated here was likely purchased with a special sinking fund, amounting to perhaps $178,000, which was established by some of the more important Dutch investors—whose sons also owned land in the Hyde Park area of upstate New York.

The U.S.Treasury sent $11,250,000 in stocks to the French ministry of finance. The remainder of the $15 million purchase price would be set aside to pay American merchants’ claims against France. Livingston and Monroe had pledged an advance of $2 million to be channeled through a Philadelphia banking firm, Willing and Francis. Baring bought a third of those stocks. Eventually all funds would pass through Barings. Every major player was happy: Napoleon bought arms; we doubled our territory; Great Britain controlled this financial pipeline and enhanced her national wealth.

Consider how a nation just emerged from its revolutionary fatigues could acquire such an increase in security and territory, and how it could pay for it right after another war largely fought on its own soil. The United States operated on a shoestring financially, but paid its way in an increasingly complex world of finance, and proved its worth. Gallatin’s prudent budget administration meant that no additional taxes had to be levied upon citizens to pay off the stocks. Interest, and later redemption, payments came from selling public lands.

Baring and Sons Profit

In late November 1803, the Spanish Governor of Louisiana presented a representative of the French government with a silver platter holding keys to important public buildings in New Orleans. (It was a comic-opera scene, of course; Spain had retroceded Louisiana to France three years before.)

A few weeks later, the Frenchman handed the same silver platter and keys to an American official. When Lewis and Clark crossed the Mississippi from Camp River Dubois on 14 May 1804, and started up the Missouri River, they entered a land that had been delivered on a silver platter.

Baring and Sons might have smiled at the irony. They, in turn, had found a pot of gold. It is estimated that after all the stocks were retired and all payments made, their company profited to the tune of $3 million. At the appointed time the United States began repaying the loan—which, including interest, came to around $20,000,000.

And Marbois had gotten a better price for Louisiana than Napoleon expected!