The Price of Manhattan

See why the Dutch West India Company viewed New York as overhead and traded the future metropolis for a monopoly on nutmeg.

[Speaker 1]: Eighty-four shillings. [Speaker 2]: In 1667? [Speaker 1]: In 1667. That is the price, in London, for a single pound of nutmeg. [Speaker 2]: To put that in perspective for where we are today... if you adjust for inflation and purchasing power, that is roughly the equivalent of a luxury car payment. For a bag of spice. [Speaker 1]: And that price represents a markup of about sixty thousand percent from what it cost to pull those seeds off a tree in the Banda Islands. [Speaker 2]: Which explains why, at the time, nutmeg was worth more by weight than gold. It wasn’t just a flavor for pudding. It was a status symbol. It was a preservative. People actually believed it could cure the plague. [Speaker 1]: It was the oil of the 17th century. And to secure the monopoly on this one wrinkled little seed, the Dutch Republic made a decision that, looking back, seems like the worst real estate deal in human history. [Speaker 2]: They signed a treaty. They willingly gave away a massive wedge of North America-including the island of Manhattan-to the English. [Speaker 1]: We usually hear this story framed as a swindle. The smart English tricking the Dutch out of the future capital of the world. But that is looking at it through a modern lens. Because the question isn’t just why they gave it up. [Speaker 2]: Right. The question is: what if they hadn't? [Speaker 1]: Today, we are looking at the world where New York remained New Amsterdam. And how a trade for a bag of nutmeg might be the only reason the United States exists at all. [Speaker 2]: To understand why a rational government would give up Manhattan, you have to understand that in 1664, Manhattan was not a prize. It was a problem. [Speaker 1]: It was a corporate problem. [Speaker 2]: Exactly. We tend to think of colonies like nations-little flags on a map. But there was a fundamental difference between what the English were doing in America and what the Dutch were doing. [Speaker 1]: The English were settling. [Speaker 2]: They were settling. New England, up in Massachusetts, was populated by religious dissidents, families, farmers. By 1664, there were about fifty thousand English people living there. They were building a society. [Speaker 1]: But New Netherland... that wasn’t a society. It was a company town. [Speaker 2]: It was run by the Dutch West India Company. The WIC. And for the WIC, New Amsterdam-which is New York City today-was essentially a branch office. Its job was to collect beaver pelts. And if the branch office costs more to run than the furs are worth... [Speaker 1]: You liquidate the asset. [Speaker 2]: You cut your losses. The Company directors in Amsterdam actually viewed the colony as "overhead." They refused to send soldiers to defend it because soldiers are expensive. [Speaker 1]: So you have this imbalance. Fifty thousand English settlers pressing in from the north and south. And in the middle, you have maybe nine thousand Dutch employees and traders who are mostly there to make a buck, not to build a new Jerusalem. [Speaker 2]: And that geography is crucial. We need to picture the map. You have English Virginia to the south. English New England to the north. And right in the middle, separating them, is this Dutch wedge. The Hudson River. [Speaker 1]: The "Wedge Strategy." [Speaker 2]: It’s the strategic nightmare for England. As long as the Dutch control that river, the English colonies are physically cut in half.…