Louisiana Purchase and the Making of America

It probably is the largest land deal ever made, and in many ways, it changed the world. The Louisiana purchase was made 221 years ago, when the nascent and fledging United States bought roughly 830,000 square miles of territory, west of Mississippi river from France at a price of 15 million dollars or about 4 cents an acre. It was a breathtaking bargain, if not a steal and it added to the US a land area larger than today’s France, Spain, Portugal, Italy, Germany, Holland, Switzerland and the British Isles combined.

The Louisiana Purchase extended United States sovereignty across the Mississippi River, nearly doubling the nominal size of the country. It stretched from the Gulf of Mexico to Canada, and from the Mississippi River to the Rocky Mountains. The purchase included land from fifteen states in the current US, and two Canadian provinces, including the entirety of Arkansas, Missouri, Iowa, Oklahoma, Kansas, and Nebraska; large portions of North Dakota and South Dakota; the area of Montana, Wyoming, and Colorado east of the Continental Divide; the portion of Minnesota west of the Mississippi River; the northeastern section of New Mexico; northern portions of Texas; New Orleans and the portions of the present state of Louisiana west of the Mississippi River; and small portions of land within Alberta and Saskatchewan

This was probably the deal and the moment that created the modern United States with momentous consequences. The acquired territory was rich in gold, silver and other sought-after minerals and also had vast tracts of huge forests and endless lands for grazing and farming. The new acquisition would make America immensely wealthy and according to Thomas Jefferson, “The fertility of the country, its climate and extent, promise in due season important aids to our treasury, an ample provision for our posterity, and a wide-spread field for the blessings of freedom.” While it was an outcome of propitious circumstances, serendipity and geopolitics, If the US had not acquired the Louisiana territory, the possibility of it becoming a continental power were very slim and the world would have been a different place.

The “Louisiana territory” was officially founded on April 9, 1682, when the French explorer Robert Cavelier erected a cross and column near the mouth of the Mississippi and read a declaration of French claim to a group of Indians, who probably understood nothing. He took possession of the whole Mississippi River basin, in the name of “the most high, mighty, invincible and victorious Prince, Louis the Great, by Grace of God king of France and Navarre, 14th of that name.” It was in honour of Louis XIV that he named the land Louisiana and after a few decades, in 1718, French explorer Jean-Baptiste le Moyne, founded a settlement near the site of La Salle’s proclamation, and named it la Nouvelle Orléans or New Orleans, named after Philippe, Duke of Orléans and Regent of France. By the time of the Louisiana Purchase, its population of whites, African slaves and other free people was about 8,000 and the place was picturesque combination of French and Spanish colonial architecture and Creole cottages. New Orleans boasted a thriving economy based largely on agricultural exports.

For more than a century after La Salle took possession of it, the Louisiana territory, with its scattered French, Spanish, German, and Native Americans settlements, kept passing between the Spanish and French. While the French were fascinated by America, they were torn between their dual images of a New Eden and a primitive place fit only for degenerate life-forms. The official view was summed up in 1710 by Antoine de La Mothe Cadillac, the new governor of the territory in a long 42-page report to the king written soon after he arrived, which summed-up in a single sentence translated to – “The whole colony was not worth a straw at the present time”. Concluding that the area was valueless, at the end of the French and Indian wars in 1762, France transferred its possessions west of Mississippi, New Orleans and Louisiana to Spain, and the next year in 1763, the territories east of the Mississippi, including Canada, were ceded to Great Britain.

But things changed when Napoleon took power in 1799 and aimed to restore France's presence on the continent. Napoleon had a vision of a renewed western empire for France, and he wanted to recapture Louisiana from Spain. Control over this vast territory would halt the westward expansion of the young United States and would supply French colonies in the West Indies with the goods they needed. In 1800, the territory again changed hands, when Napoléon negotiated the clandestine Treaty of San Ildefonso with Spain’s Charles IV. The treaty called for the return of the vast Louisiana territory to France in exchange for the small kingdom of Etruria in northern Italy, which Charles wanted for his daughter Louisetta.

Although Napoleon had previously signed a peace treaty with the United States, rumours of this secret deal between France and Spain caused severe anxiety among the founding fathers of the nascent country in Washington City. When Secretary of State James Madison received a copy of the secret deal in November of 1801, the rumours were confirmed and over the course of the next two years, President Thomas Jefferson prepared to counter the French presence and Napolean’s dream of a French empire in the Mississippi Valley and port of New Orleans. Adding to the political uncertainty for the new nation was Jefferson’s fear that a French presence in the American south would prompt a British invasion, putting the world’s two superpowers in combat on America’s border.

Jefferson and Madison wanted a diplomatic solution and, in an effort to arrive at one, in 1802 they dispatched Robert Livingston to France to check whether France would be willing to sell the Louisiana territory along with the New Orleans port to the United States. While Jefferson and his Secretary of State James Madison worked to resolve the issue through diplomatic channels, the opposition Federalist Party and some factions in the western states and territories called for war and advocated secession by the western territories in order to seize control of the lower Mississippi and New Orlean. Anxious and aware of the need for action and concerned with the threat of disunion, when the progress on negotiations with France stalled, Jefferson dispatched James Monroe as a special envoy to France to assist Livingston in hammering out the details of the deal, with discretionary powers to spend $9,375,000 to secure New Orleans and parts of the Florida’s. But, by the time Monroe arrived in France, in April 1803, fate had intervened in a different way and Monroe came to know about a deal that was on the table.

For much of the 1790s, post the French revolution, Napoleon was busy waging wars across Europe. After a decade of wars, by the turn of the century, the fighting lulled, and the exhaustion led to a short-lived peace from October 1801 to May 1803 between France and the British empire. Despite the peace, Napoleon’s desire for empire and the mutual mistrust between the two world powers led to an increasing appetite for building larger armies and navies. The raising of forces required men and material, but above all else, it first required hard cash. But by 1803, Napoleon's plans to re-establish France in the New World were unravelling, whose purse strings were stretched putting down a costly slave revolt in Haiti.

Modern day Haiti was ruled by France as a colony called Saint-Domingue from the 1600s, when the French pirates first settled there in 1625 and later when French settlers established a colony in 1663. The colony's economy was based on sugar, coffee, tobacco, indigo, cotton, and cacao. The French exploited the African slaves who made up most of the population and the colony had one of the harshest slave systems in the Americas. Inspired by the French Revolution, the local population decided to fight for independence. The slaves of northern Saint-Domingue led by Toussaint L'Ouverture rebelled in 1791. By 1803, the twelve-year revolt of slaves and free blacks in the Saint-Domingue was succeeding as the French army sent to suppress the rebellion was decimated by yellow fever and returned to France defeated and deflated.

As Napoleon's New World empire disintegrated, the loss of Haiti made Louisiana unnecessary. Napolean had always seen Saint Domingue, with a population of more than 500,000, producing enough sugar, coffee, indigo, cotton and cocoa to fill some 700 ships a year, as France’s most important holding in the Western Hemisphere. The Louisiana Territory, in Napoléon’s view, was useful mainly as a granary for Saint Domingue. With the colony in danger of being lost, the territory was less useful, and at the same time, a new war with Britain seemed inevitable. France's minister of finance, François de Barbé-Marbois, who had always doubted Louisiana's worth, counselled Napoleon that Louisiana would be less valuable without Saint Domingue, and in the event of war, the territory would likely be taken by the British from Canada. France could not afford to send forces to occupy the entire Mississippi Valley, so why not abandon the idea of empire in America and sell the territory to the United States?

Napoleon agreed and on April 11, the day before Monroe arrived in Paris, French Foreign Minister Charles Maurice de Talleyrand told Livingston that France was willing to sell all of Louisiana. It was an opportunity, which Jefferson later called "a fugitive occurrence”. Monroe and Livingston immediately entered into negotiations with France. From the initial French expectation of $25 million, negotiations and bargaining continued and on April 30, Livingston and Monroe reached an agreement that exceeded their authority — the purchase of the Louisiana territory, including New Orleans, for $15 million. While the deal was a bargain, at the time the treaty was ratified, the US national debt was almost $81 million, and the US Treasury was in no position financially to simply write a check for the amount. The question for the United States government was how to raise the necessary funds to complete such an unprecedented deal. As the American side pondered over funds to meet the need, they realised that such a large amount could not be raised through revenue nor through domestic investors. But the resourceful Barbé-Marbois had an answer for that. He had contacts with the leading banks in Europe and for the funding of Louisiana, the US government turned to the two most formidable banks of the day, Barings Bank of London and Hopes of Amsterdam, which were friendly towards the new nation. Soon both banks were at the center of a financing operation, advising both the United States and the French government and also agreed to make the actual purchase and pay Napoléon cash.

In 1818, the Duc de Richelieu called Barings Bank the sixth great European power, just after England, France, Prussia, Austria and Russia. Barings was one of the most significant and influential merchant bankers of the 18th and 19th centuries. They were one of the few who believed in the newly formed United States and were willing to invest in it and few were more interested in the progress of the United States than Baring Brothers & Company. Barings had built a high reputation since its founding in 1763, and its aspirations were as global as the British Empire. As an emerging market, akin to China, India and Brazil today, the growing market in the American union, a combination of risk and reward was a natural attraction for Barings. Its involvement was at first professional, then familial with the marriage of two partners into Philadelphia society in 1798 and 1802.

Alexander Baring proposed that financing the deal could only be achieved through a massive American bond issuance. In other words, the Americans would take on debt to provide them with the sum needed to carry out the deal. Of the $15 million required, $3.75 million USD would be covered by the US government assuming responsibility for certain French damages already owed to US citizens, while the remaining sum, $11.25 million USD would be paid to France in the form of a massive delivery of Treasury bonds. The treaty itself comprised three documents - the treaty of cession and two conventions. The two conventions detailed how the United States would pay. The first stated that $11,250,000 would be paid by stocks with an interest rate of 6 percent and not redeemable for fifteen years. These became known as the Louisiana 6 percent stocks. The second convention outlined the assumption of claims made by the US citizens against France. In other words, it specified how U.S. citizens who were owed money by France were to be paid. The debts, amounting to $3,750,000, would be paid with 6 percent interest, and payment would commence sixty days after the exchange of ratifications.

The bonds issued to France were the first US securities floated in the international markets. With the delivery of the bonds, France relinquished its control over Louisiana and the Port of New Orleans to the United States. However, interest payments alone would not fund Napoleon’s preparations for war with Britain. So, the bankers came up with a follow-up plan that would involve purchasing of these Louisiana bonds from the French government. This accomplished two things: first, it provided upfront cash to Napoleon and secondly, it transferred ownership of the American debt to Barings Bank and Hopes of Amsterdam. As it always happens, taking advantage of Napolean’s desperate need for cash, the bankers negotiated the price of the block bond purchase at 86.5% of the face value of the bonds. In other words, France took a haircut and Barings and Hopes, bought the bonds at a discount knowing they could sell them on the secondary market for a premium and they did find investors eager to buy the bonds in London, Amsterdam, and Washington.

The purchase of Louisiana represented a 19% increase to the public indebtedness of the United States government which already stood at $80 million. The big question facing Jefferson’s government was how to service the debt? The legacy and memories of the independence war against the British were strong, and as a result, Americans were mistrustful of their new government levying taxes. The US government and Treasury had limited debt servicing capacity, primarily relying on federal customs tariffs for revenues. At a time when the United States had no tax revenue, to pay the $675,000 due to its Louisiana bondholders on an annual basis in interest alone, the government sold land and collected customs revenue at its ports to ensure timely payment. The acquisition of the Port of New Orleans added another $200,000 a year in customs royalties as well. Looking at the whole picture, in 1804 when the first round of interest payments came due, the Federal customs revenues were $10.48 million, and the total government revenue was $11.83 million. What it meant was that financing of the Louisiana purchase represented almost the entirety of the country’s annual revenue. The United States operated on a shoestring budget but managed its way out with dexterity, with judicious budget administration and no additional taxes were levied to pay off the bonds. The United States made the last payment on October 21, 1820, and the interest on the Louisiana bonds came to an end. The final cost for the Louisiana Purchase was approximately $23,221,320.

As a history buff, maps fascinate me. I have spent hours with maps and the more I look at them, the more educating they can be. When I first came across the above map, the first question that came to my mind was, “Would the Unites States of America, as we know today exist, if the Louisiana purchase had not happened?”

Was it truly the America’s belief in “Manifest Destiny”, a phrase that in nineteenth century America, represented a growing belief that American settlers were destined to expand westward across North America, and that this was both obvious (manifest) and certain (destiny). The belief was rooted in American exceptionalism and is one of the earliest expressions of American imperialism. The concept was used by Democrats to justify the 1846 Oregon boundary dispute and the annexation of Texas in 1845.

This was a direct result of the Louisiana Purchase in 1803 and set the stage for the continental expansion of the United States. Many began to see this as the beginning of a new providential mission, where the success of the United States as a "shining city upon a hill", would motivate people in other countries to establish their own democratic republics.

While there were adventurers and explorers whose curiosity and daring took them into the western lands, for most Americans, lands west of Mississippi were a mystery and the lands along the pacific coast were Terra Incognito. Even in the mid and late 18^th century, there were maps that were projecting California as an island off the western coast of the continent.

But immediately after the Louisiana purchase, the Lewis and Clark expedition changed all that. More than any other person, President Thomas Jefferson was responsible for the expedition. Beginning in the early 1780s, Jefferson imagined a scientific exploration of the interior of North America that would catalogue flora and fauna and thoroughly map the vast reaches between the Mississippi River and the Pacific Ocean. During the 1780s and 1790s, he approached George Rogers Clark and French scientist Andre Michaux to undertake a scientific expedition across the continent, and he offered to finance adventurer John Ledyard’s proposal to cross North America from west to east, but these plans did not come fruition. He also worried that other nations might control the vast Trans-Mississippi region and compromise US political and economic security.

Jefferson commissioned the expedition, shortly after the Louisiana Purchase of 1803, to explore and detail as much of the new territory as possible. In addition, one of the major aims of the expedition was to find a practical travel route across the western half of the continent. The goal was to establish an American presence in the new lands before European powers attempted to establish claims of their own. The campaign's secondary objectives were scientific and economic, to document the biodiversity, topography and geography and to establish positive trade relations with Native American tribes. After two years and travelling 8000 miles, the expedition returned to St. Louis to report their findings to President Jefferson via maps, sketches, and various journals. The Lewis and Clark Expedition, which brought more than thirty overland travellers in contact with the Pacific coast and into Oregon country in 1805-1806, was the most successful North American land exploration in US history. The Expedition also established an American claim to the Oregon Country that added to Robert Gray’s 1792 chart of the Columbia River when the United States and Great Britain negotiated over control of the Pacific Northwest in 1846.

The Lewis and Clark Expedition was certainly a major success. It achieved its main purpose of exploring and mapping out the lands between the Mississippi River and the Pacific Ocean, and the presence of American explorers gave the United States a stronger claim to the Oregon Country. The expedition brought back about 140 detailed maps and many records and samples of natural resources and botanical specimens new to Europeans and Americans. Over the course of the expedition, Lewis and Clark identified 178 new plants and 122 animal species and subspecies. Additionally, their expedition paved the way for increased settlement of the Louisiana Territory and facilitated fur trade in the Pacific Northwest.

The expedition was a transformative event in American history, opening up new frontiers and expanding the country’s horizons. Inspired by Lewis and Clark's success, several other westward expeditions were commissioned, such as Zebulon Pike's expeditions into modern Colorado and New Mexico. During the first decades of the nineteenth century, the geographic image of western North America began to change dramatically, evolving from an almost empty interior with a hypothetical single mountain range serving as a western continental divide, to an intricate one showing a tangle of mountains and rivers. A continent that had once seemed empty and simple was now becoming full and complex. It would take another fifty years to complete the cartographic image of the West as we know today, and in the decades after Lewis and Clark, a host of explorers, fur traders, missionaries, and government topographers mapped the continent, culminating in the 1850s with the Army's Corps of Topographical Engineers surveying the southwestern and northwestern boundaries of the United States as well the potential routes for a transcontinental railroad.