The real estate industry may see some large land deals these days, from the $450 million Witanhurst mansion in London to the $2 billion Antilla building in Mumbai, but these pale in comparison to some historical land deals.
- While modern-day multi-million or multi-billion real estate deals can seem staggering, they lose some luster when compared to historic land sales.
- Russia's sale of Alaska to the U.S. in 1867 is one of the biggest land deals in history, as it gave the nation 375 million more acres and a huge domestic source of oil.
- The 1803 Louisiana Purchase from France proved to be transformational for the United States, as it gave the young country access to 13 states and 512 million additional acres.
- The 1494 Treaty of Tordesillas split the lands outside Europe between Spain and Portugal, then the world's biggest superpowers. Spain got the better deal, gaining control of much of modern-day Latin America.
The Alaskan Purchase
The U.S. purchase of Alaska from Russia in 1867 is considered to be one of the largest land deals in history. Fearing another war with Britain after the Crimean War, Russia rushed to sell Alaska to the United States for just $7.2 million, or about two cents per acre, to prevent nearby British Columbia from taking over the territory, and to bolster its struggling finances.
Today, Alaska is, of course, worth much more than that. The state encompasses 586,412 square miles or more than 375 million acres. Even at a cost of just $100 per acre, that would equate to more than $37 billion. Plus, the state churns out hundreds of thousands of barrels of oil each year.
The Louisiana Purchase
The Louisiana Purchase from France in 1803 is another U.S. acquisition that's considered to be one of the largest land deals ever. With a purchase price of just $15 million, the U.S. added some 13 states' worth of territories at less than three cents per acre.
But the Louisiana Purchase almost didn't happen for a couple of reasons. President Thomas Jefferson was widely criticized for acting above and beyond his constitutional authority, especially given his strict interpretation of the Constitution. Secondly, many Federalists worried that the U.S. was funding a war against Spain by buying from Napoleon.
Today, the land in the Louisiana Purchase is worth significantly more. The deal encompassed 828,000 square miles, which equates to approximately 512 million acres. With land costs today averaging between $1,000 and $4,000 per acre in the continental U.S. in 2019, the total value of the Louisiana Purchase is therefore likely to be near $1.2 trillion.
The Treaty of Tordesillas
Back in the 1400s and 1500s, Spain and Portugal were the world's two largest superpowers carving up the world. The discovery of the New World by Christopher Columbus led to some disputes about who had rights to certain territories. Eventually, the two countries agreed to divide the world along a meridian 370 leagues west of the Cape Verde islands.
Unfortunately, the New World turned out to move mostly west in direction and the deal turned out to be rather one-sided. Spain ended up colonizing the vast majority of South America except for present-day Brazil, where Portuguese is still spoken. After 1898, the treaty became somewhat obsolete as the two world superpowers grew less influential.
While the total value of this deal is impossible to calculate, the control Spain maintained over most of Latin America played an important role in history. The majority of the countries in the region asserted their independence in the early to mid-1800s. By the 1900s, some Latin American countries were participating in the World Wars as U.S. allies.
The Bottom Line
It may be easy to grasp at the current real estate market and the tens to hundreds of millions of dollars spent acquiring palatial estates. However, these purchases seem minuscule compared to a time when countries could sell an entire state.