Welcome to today's Dick Dive. I'm your host.
And today we are digging into a stack of Wikipedia
notes on one of the most famous real estate deals
in human history. Hello, everyone. Glad to be
here. So we're talking about the 1803 Louisiana
Purchase. And if you're listening, you probably
have this like mental image from grade school.
Oh, absolutely. The whole Thomas Jefferson signs
a neat little piece of paper, hands over a giant
check and boom, the U .S. magically doubles in
size. Exactly. But. The numbers we are looking
at in these sources are just staggering. We are
talking about 828 ,000 square miles of land,
which is massive. Right. It's over 26 % of the
present day contiguous United States. And they
got it all from France for 15 million dollars.
Yeah. Which averages out to what about three
cents an acre? Yep. Three cents an acre or roughly
380 million dollars in 2024 money. So our mission
for this deep dive is to completely deconstruct
the myth that this was just some simple clean
land transaction. Because it really wasn't. When
you actually bypass the standard textbook summary,
that whole clean transaction narrative completely
falls apart. Totally. Today we're going to uncover
a story that is driven by global geopolitical
chaos, some really shady financial maneuvers,
and honestly the stark reality of what the U
.S. actually bought. OK, let's unpack this because
we need to jump straight into the global chessboard
here. The catalyst wasn't some grand American
vision for a continental empire. No, not at all.
It was sheer unadulterated panic over shipping
logistics. Right. The precarious situation of
the young United States in the late 1700s. They
desperately needed free transit down the Mississippi
River. Because if you're a farmer in the western
territories, you have to ship agricultural goods
down to the port of New Orleans. Exactly. And
the U .S. actually had a treaty with Spain, who
controlled the territory at the time, that gave
American merchants the right of deposit in New
Orleans. But then, in 1798, Spain just suddenly
revokes that right. Which is a total nightmare
for the Americans. Total panic ensues. American
goods would literally just rot on the docks without
that port. And the panic only gets worse in 1800,
right? Because there's a secret treaty. Yes.
The Third Treaty of San Ildefonso. Spain secretly
transfers the entire Louisiana territory back
to Napoleon's France. So Jefferson is looking
at this and he's terrified. He sends James Monroe
and Robert Livingston to Paris with up to 10
million dollars, right? Yep, 10 million. And
their only job, just their singular mission,
is to buy the city of New Orleans, just the city.
Just secure the port, that's it. But then Napoleon
suddenly offers them a piece of land the size
of Western Europe. I mean, it's like going to
the store for a gallon of milk and the manager
offers to sell you the entire supermarket for
an extra five bucks. That is a great way to put
it. So why? Like, why did Napoleon just give
up on North America? Well, what's fascinating
here is that the answer has almost nothing to
do with Thomas Jefferson or the United States.
Wait, really? Yeah. The fate of the Louisiana
territory was actually decided thousands of miles
away down to the Caribbean. by the Haitian Revolution.
Oh, wow. OK. See, Napoleon originally wanted
this massive, highly lucrative North American
empire. He wanted to use the colony of Saint
-Domingue, which is present day Haiti as this
economic engine producing immense sugar wealth.
Fueled by enslaved labor, of course. Exactly.
And Louisiana. Louisiana was just supposed to
be the agricultural breadbasket to feed that
Caribbean colony. But the enslaved population
of Saint -Domingue had already launched a massive
rebellion, right? The one initially led by Choussaint
Louverture. Correct. And Napoleon was absolutely
determined to crush it. So he sends a massive
military force commanded by his brother -in -law,
General Charles Leclerc. To restore slavery.
Yes. But it was a catastrophic failure. The French
military met fierce resistance. And on top of
that, a devastating outbreak of yellow fever
sweeps through the French camps. I read that
it absolutely decimated their ranks. It did.
Over two thirds of Napoleon's troops died in
the Caribbean. So Napoleon's sitting there in
Europe looking at the board. His Caribbean sugar
engine is gone. His military is crushed. And
without Santa Ming, Louisiana is just, well,
it's useless to him. Exactly. It went from a
strategic asset to an indefensible liability
almost overnight. Plus, war with Britain was
imminent. Right. The piece of Amiens was collapsing.
And Napoleon knows the British Navy is far superior.
They could just sail into the Gulf of Mexico
and seize New Orleans whenever they wanted. France
couldn't defend it. And he desperately needs
cash for his European war. Exactly. So he just
decides to liquidate the whole thing. Which brings
us to April 11, 1803. Monroe and Livingston are
sitting there in Paris, hoping to get one city,
and suddenly the whole territory is on the table.
They scored the deal of a lifetime. They signed
the treaty on April 30th, but they have a major
problem. A huge problem. Right. Signing a piece
of paper is the easy part. But the fledgling
U .S. government doesn't actually have $15 million
in cash lying around. Not even close. So how
do they pay for it? Well... They have to scrabble
to finance it. They assumed about $3 .75 million
of French debts that were already owed to U .S.
citizens. OK. Which leaves $11 .25 million to
be financed through 6 % government bonds. But
here's where it gets really interesting. To actually
facilitate this deal, the U .S. used European
banks. Specifically, British and Dutch banks,
Francis Bering & Company in London, and Hope
& Co. in Amsterdam. Yes, sovereign financing
at its finest. But think about the irony here.
British banks bought U .S. bonds to give millions
in cold hard cash to Napoleon. The exact guy
who is literally massing fleets on the coast
to invade Great Britain. It sounds absurd to
us today. It sounds like treason. I mean, how
did the British government allow a British bank
to fund their worst enemy? Well, the British
government actually allowed it because they were
looking at the big picture. Okay, explain that.
It was ruthless pragmatism. The British decided
it was vastly preferable for the neutral Americans
to hold the territory rather than their hostile
French enemies. Because if France kept it, they'd
have a permanent foothold in North America. Exactly.
So handing Napoleon some temporary cash was seen
as the lesser of two evils. Wow. And the U .S.
is just left holding these bonds right and paying
interest. I saw in the notes that the final cost
to the U .S. with interest by 1823 ended up being
over $23 .3 million. Yes. Still a bargain, but
definitely not the clean 15 million cash handoff
people picture. But securing the funding overseas
was only half the battle. Oh, yeah. Bringing
the treaty home to Washington sparked an ideological
civil war. It really did. Because President Thomas
Jefferson was a strict constructionist. I mean,
his whole political brand was about a small,
strictly limited federal government. Exactly.
He knew the Constitution didn't explicitly grant
the president the power to just buy foreign land.
So how does he justify buying half a continent?
Well, Jefferson was actually really tortured
by this. He knew it wasn't strictly legal. He
rationalized it using a guardian analogy. Right,
like he's doing something illegal but necessary
for the good of his ward in the country. But,
I mean, wasn't that just intellectual gymnastics?
Pretty much. Because Alexander Hamilton and the
Federalists were absolutely furious. They opposed
the purchase, saying it was too expensive and
completely unconstitutional. But if we connect
this to the bigger picture, their true motives...
were deeply political, not just constitutional.
The Federalists were mostly the mercantile elite
based in New England. OK. And they were terrified,
just absolutely terrified, that adding all these
new Western states would completely dilute their
political power. Ah, because the new states would
be filled with agrarian farmers who would vote
for Jefferson's party. Exactly. They'd lose their
banking influence and their grip on Congress.
The raw panic was so intense that some New Englanders,
like Senator Timothy Pickering, actually explored
forming a separate Northern Confederacy. Wait,
really? They wanted to secede? Yes, over a real
estate deal. That is wild. And obviously we have
to talk about the other major source of domestic
backlash, the debate over slavery. Right? It
was fierce. Southern planters wanted to extend
slavery into the new Western territories. But
at the same time, weren't those same southern
planters incredibly anxious about it? Very much
so. Because remember, they had just watched the
Haitian Revolution unfold. They were terrified
that bringing existing enslaved populations into
the U .S. from Louisiana might spark Haitian
-style revolts on American soil. So it's this
incredibly volatile mix of greed and fear. which
honestly just foreshadows the Missouri Compromise
and the American Civil War. Absolutely. The Louisiana
Purchase basically set the stage for the rest
of the 19th century. So what does this all mean?
I mean, they bought it. They got British banks
to fund it. Jefferson legally justified it. But
what exactly did they buy? That is the million
dollar question. Because the borders were completely
undefined. Completely phantom borders. The treaty
language was incredibly vague. The U .S. claimed
everything up to the Rocky Mountains and down
to the Rio Grande. But Spain argued no. The U
.S. only bought the Western Bank of the Mississippi.
Right. This ambiguity triggered an immediate
scramble. The U .S. had to send out mapping missions
just to figure out what they supposedly owned.
Like the Lewis and Clark expedition. Exactly.
and the Red River Expedition and Pike's Expedition.
They were out there actively trying to assert
claims. The borders weren't actually settled
until the Adams -Onus Treaty of 1819. Wow, 16
years later. You know, there's an analogy in
our sources that I think really drives this home
for you listening. We say the U .S. bought the
land, but France actually controlled only a tiny
fraction of those 828 ,000 square miles. Mostly
just New Orleans. Right. So... It's more like
they bought an exclusive hunting license. They
didn't really purchase the land itself. They
purchased the preemptive right to obtain the
land from Native Americans. By treaty or by conquest.
Right, effectively blocking out other European
powers. That is a crucial point. There's a really
powerful quote from Felix S. Cohen, who was a
lawyer for the Interior Department. He noted
that practically all this real estate was purchased
from its original Indian owners, not from Napoleon.
Because the Native Americans actually lived there
and controlled it. Exactly. And the true cost
of that land reflects that reality. By 2012,
the total cost to the U .S. government for subsequent
treaties and financial settlements with Native
American tribes for this specific land was estimated
at $2 .6 billion. $2 .6 billion. Yes. Which is
about $11 .4 billion in 2024 dollars. So that
original $15 million. paid to France. It was
only about 3 .5 percent of the total cost of
land. That is just incredible. Summarizing this
incredible journey for everyone listening, it
starts with a revoked shipping treaty in New
Orleans. And it spirals into this global banking
maneuver that doubles the size of the country,
sparks a massive constitutional crisis, and basically
sets the stage for centuries of conflict and
westward expansion. It's messy. It is deeply
messy. History is rarely a clean transaction.
It's interconnected. And honestly, it's often
built on the suffering of others. Which brings
up a final thought from our sources. This raises
an important question, something you listening
should really mull over. There's a really dark
irony here. Thomas Jefferson used the Louisiana
Purchase to vastly expand what he called the
American Empire of Liberty. Right. But in 1804,
he and Congress were so terrified of slave revolts
at home that they flat out refused to recognize
the newly independent Republic of Haiti. The
very nation whose bloody revolution literally
made the Louisiana Purchase possible. Exactly.
Instead of recognizing them, the U .S. slapped
Haiti with a devastating trade embargo. Wow.
So the birth of America's continental empire
was fundamentally tied to the economic strangulation
of the hemisphere's second free republic. That
is, man, that is a heavy thought to end on. But
it completely changes how you view the map of
the United States. Thanks for joining us for
this deep dive. We'll catch you next time.