At some point in every history class, the subject invariably comes up that Manhattan Island was purchased from naive Native Americans by savvy Europeans for mere pocket change. When you hear about such a valuable piece of real estate being given up for such an insignificant sum, you can’t help but believe that someone must have been ripped off. Undoubtedly, someone did get taken in this great land grab. Determining who was conned is not a simple task.

Dutch explorer Peter Minuit sailed to Manhattan Island in 1626. He liked what he saw and entered into negotiations with local Native Americans. They struck a deal in which title to the island passed to Minuit in exchange for an assortment of goods, documented as “10 boxes of shirts, 10 ells of red cloth, 30 pounds of powder, 30 pairs of socks, 2 pieces of duffle, some awls, 10 muskets, 30 kettles, 25 adzes, 10 bars of lead, 50 axes, and some knives.” beads, hatchets, and other items that Minuit valued at 60 guilders. The Indians went away with the equivalent of a carload of good deals at a garage sale, and Minuit picked up what would become some of the most valuable real estate in the world.

How much did he actually pay for Manhattan? The conventional wisdom is that 60 guilders is equal to $24. That figure was thrown out there by nineteenth century historians, but that certainly is not the value in today’s market. The International Institute of Social History at the Royal Netherlands Academy of Arts and Sciences determined in 2011 that 60 guilders in 1626 would fetch you €734.77 ($833.55, based on the rate of exchange at the time of this writing). Depending on your point of view, that still may be far too little to pay for 30 square miles of prime real estate, but it is certainly a better deal than the $24 legend.

According to a study published in Regional Science and Urban Economics in May 2018, the estimated value of the entire amount of developable land on Manhattan Island in 2014 was $1.74 trillion. This suggests an annual average return of about 6.4% on the original 1626 investment. Again, that’s not nothing, and it’s a better rate of return than if the 60 guilders had been parked in a basic savings account, but when you consider the average annualized total return for the S&P 500 index over the past 90 years is 9.8%, it’s beginning to look like Minuit paid too much for his land grab.

On top of all of this, we have a couple of complications that cannot be ignored. For one thing, some scholars have pointed out the difference in the two different cultures’ understandings of land ownership. For Native Americans, the accepted cultural practice was for a visiting tribe to give gifts to the resident tribe in exchange for assurance of safe passage through the land or for temporary occupation by the visitors. If that was the case, Minuit may have unloaded all of his cargo, thinking he was purchasing the real estate, when, in reality, all he was doing was paying a rental fee for a few days of camping.

A second complication warrants serious consideration. There is some dispute as to which tribe entered into negotiations with the Dutch explorer. There is good reason to believe that Minuit purchased Manhattan Island from the Canarsee tribe. If that was the case, we can safely assume none of the Canarsee felt the least bit ripped off, considering that they did not actually claim to own any of Manhattan Island in the first place; they were simply passing through and were more than happy to receive the assortment of goods from the clueless Europeans.

So, who was ripped off in the real estate deal of the millennium? Long before Gregor MacGregor made a fortune selling real estate in a country that didn’t exist, or Victor Lustig twice sold the Eiffel Tower to scrap metal dealers, or Mithilesh Kumar Srivastava conned a bunch of people into buying the Taj Mahal and India’s Parliament Building, the original inhabitants of Brooklyn may have laid the groundwork for all the people who were duped into buying the Brooklyn Bridge.

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