Diplomatic issues surrounding the transaction
Although Britain and France had been at war since 1793, the negotiations for the Louisiana Purchase began during a short period of peace following the March 1802 Treaty of Amiens. War resumed in May 1803 which meant that Barings, should it continue with the transaction, would effectively be financing the war effort of an enemy of Britain.
In June the head of Barings called on the British Prime Minister to take advice. ‘It would be wise for this country to pay a million sterling for the transfer of Louisiana from France to America,’ the PM advised him, ‘and there was nothing in…[Barings’] conduct but to approve’. As the ferocity of the war increased so the PM changed his tune.‘In view of the projected invasion of this country (by France),’ he wrote to Barings on 16 December, ‘ I have… to desire that you would decline being party to remittances to France on account of the debt due from the USA in consequence of the cession of Louisiana.’
What happened next is unclear. No remittances would have been made but the sale of bonds was not precluded. In April 1804, for example, the Louisiana bonds prospectus was circulated by Barings in London. Such attitudes provide a curious insight into international banking before the age of total war. Read a transcript of the British Prime Minister’s letter to Barings.