How much would the $24 paid for Manhattan be worth in today's money?
Since elementary school I have repeatedly heard the story of how Manhattan was bought from the Indians for a mere $24 worth of trinkets. Something about this has long troubled me. Assuming the value of the barter items was estimated at about the time of the famous transaction, shouldn't it be adjusted for all those years of inflation? Maybe Manhattan wasn't such a steal after all.
Sometimes this job is too easy. In 1626 Peter Minuit bought Manhattan island from the local Indians for a load of cloth, beads, hatchets, and other odds and ends then worth 60 Dutch guilders. According to my Encyclopedia Britannica, 60 guilders in 1626 would buy you 1-1/2 pounds of silver. Naturally we assume this is troy weight, 12 ounces to the pound. Silver lately has been selling for a little more than a $4 per troy ounce.
Ergo — sorry, but a man in my position needs to say ergo once in a while — Minuit got the core of the Big A for $72 in today's money. (Lest you think the price of beads has increased remarkably slowly in the last 350 years, you should know that the $24 calculation was made in the 19th century.)
There are some who would contend that $72 or even $24 for Manhattan was not such a hot bargain. These people are mostly Republicans. But let's do a few calculations. According to the New York Public Library, the assessed value of taxable real estate in Manhattan for 1990-91 was $47 billion. Assuming the land alone accounts for 25 percent of this, land values have appreciated from a half cent per acre in 1626 to $827,000 per acre today, an increase of roughly 17 billion percent. Not bad, you are surely thinking, even by the stringent standards of the GOP.
But wait. I have a letter here from Andrew Johnston of NYC inquiring whether maybe the Louisiana Purchase ($15 million for a quarter of the country) wasn't a better bargain. Now, the Louisiana Purchase was not the best land deal the U.S. ever got. It cost 3 cents per acre in 1803 (5 cents when you figure in the interest), whereas Alaska cost 2 cents per acre in 1867. Just the same, it offers an interesting comparison.
According to Peter Wolf (Land in America, 1981), the total value of all land in the U.S. in 1975 was $1.3 trillion. Assuming an average annual appreciation of 5 percent per year, the land was worth $2.7 trillion as of 1991. The Louisiana Purchase accounts for about 23 percent of the present area of the U.S., so figure it's worth $618 billion, or about $1,160 an acre.
Having performed prodigious feats of calculation, we find that since 1803 the heartland of America has appreciated at an average annual rate of 5.5 percent per year, whereas since 1626 Manhattan has appreciated at an average annual rate of ... 5.3 percent. Conclusion: that dimbulb Minuit may have paid too much! Given the shaky assumptions behind some of the numbers above, I don't know that I'd go looking for an Indian asking for a refund. But compared to other historic U.S. land scams, Manhattan may not have been the steal everyone thinks.
The purchase of Manhattan: Wuz we robbed?
As a followup to your discussion of whether or not Peter Minuit got a bargain when he paid only $24 worth of trinkets for Manhattan, there is one added factor. I grew up in the Canarsie section of Brooklyn, New York. Named after the Canarsie Indians, it is the farthest point from Manhattan in Brooklyn.
When I was in high school, a history class published a research project in which they convincingly proved that Peter Minuit had purchased Manhattan from the Canarsie Indians. Since they did not live on Manhattan Island, it is unlikely that they had any ownership claim in the first place.
While $24 in trinkets might sound cheap for all of Manhattan, it is no bargain when you have paid it to a tribe that was just passing through. Rather than giving Mr. Minuit the bargain of the century, the Canarsie Indians may have actually sold him the proverbial Brooklyn Bridge.
I didn't mention this because I figured Peter Minuit had suffered enough, but now that you bring it up, I may as well pile on. One popular history of Manhattan notes that the Canarsie Indians "dwelt on Long Island, merely trading on Manhattan, and their trickery [in selling what they didn't possess to the Dutch] made it necessary for the white man to buy part of the island over again from the tribes living near Washington Heights. Still more crafty were the Raritans of [Staten Island], for the records show that Staten Island was sold by these Indians no less than six times."
So OK, maybe Peter Minuit was no Donald Trump. (Then again, considering the current state of Mr. T.'s real estate empire, maybe he was.) But let's not be too quick to judge. The latest crop of New York historians has taken pains to point out that there is no evidence either the Dutch or the Indians believed they had robbed or been robbed by the other party to the deal.