Setting Up the Finance for the Louisiana Purchase

Beginning in January 1803, Alexander Baring and Pierre Cesar Labouchere developed provisional plans for financing the French payment of claims by American merchants, left unsettled from the Treaty of Mortefontaine, while also financing the American payment to France for New Orleans, due to be transferred from Spain to France later that year. Pierre emphasized the importance of keeping the financial arrangements by each country with the houses of Baring and Hope, rather than with each other directly. Further, he proposed “greasing the wheels” by bribing key “influencers” from both countries to keep the entire bargain under the control of Baring and Hope. Alexander received much advice from Pierre as well as from Sir Francis Baring and Henry Hope, but was left to make the final arrangements on his own. These proved to be successful, helped by Sir Francis obtaining management in London of all U.S. government payments in Britain and Europe and Pierre Cesar obtaining partnership with two leading merchant banking firms in Amsterdam for marketing U.S. bonds there. The three conventions that comprised the Louisiana Purchase were officially enacted, first in France and then in the United States, do not mention the private contract between Alexander Baring and the three government ministers, the most important one for the finance of the Louisiana Purchase. This contract conferred all the rights of the French government over the U.S. bonds to Alexander Baring with power of attorney from Francis Baring & Co. of London and Hope & Co. of Amsterdam. In turn, Alexander signed to accept 92 individual bills of exchange payable to France in weekly amounts summing to 52 million francs (reserving 8 millions as commission).