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. –Charles R. McNeill II, Washington, D.C.
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Sometimes this job is so joyously 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 Encyclopaedia Britannica, 60 guilders in 1626 would buy you one and a half 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 $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.)
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 dim-bulb 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 a Manhattan Indian asking for a refund. But compared to other historic U.S. land scams, Manhattan may not have been the steal everyone thinks.
Art accompanying story in printed newspaper (not available in this archive): illustration/Slug Signorino.
