2: Financing the transaction
The question for the US government was how to raise the necessary finance. Such a large sum could neither be taken out of revenue nor be borrowed from US investors. It could only be found by borrowing in the European capital markets which were then dominated by Amsterdam and, to a lesser extent, London.
It is an operation of the utmost magnitude and importance and might stagger us in ordinary times and in the present would hardly attract the serious attention of any.
And so the United States government turned for help to the two leading houses in these markets, Hopes of Amsterdam and Barings of London. Both were already exceptionally friendly and well able to work together on this transaction, Hopes contributing their abundant expertise in issuing sovereign bonds and Barings providing their well established US connections. But the operation would even stretch them to the limit.
‘It is an operation of the utmost magnitude and importance, might stagger us in ordinary times,’ wrote P. C. Labouchère from Amsterdam, ‘and in the present (times) would hardly attract the serious attention of any.’
Sir Francis Baring was more to the point when writing that ‘we all tremble at the magnitude of the American account’.
In January 1803, in the early stages of the transaction, PC Labouchère of Hope & Co wrote to Alexander Baring, son of Sir Francis, the senior partner of Barings, about the arrangements for the loan. He described The Louisiana Purchase as being 'of the utmost magnitude and importance'.