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I came across an interesting article that points to a change.org petition suggesting that the United States sell the state of Montana to Canada for one trillion dollars ($1,000,000,000,000) and put that directly towards the nation's debt.

I don't think the petition is serious and has less then a nothing percent chance of happening, I think, but it raises a very interesting question. When one nation wishes to sell territory to another nation, how is that value determined?

I'm aware of instances where territory was ceded through treaty, as a means of making or keeping peace. That's not what I'm thinking about. I'm think of things like the Louisiana Purchase, where the USA paid France for most of what is the Continental US today as a simple transaction. France wanted money and the USA wanted the territory.

How are the costs of these things usually determined? It might be useful to look at how the price for the Louisiana Purchase was determined, as a real example that did occur. Then using the same thought process, what would Montana cost if it really was sold to Canada? Other examples might help, especially if they are more recent than the Louisiana Purchase.

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    As the worth of anything is determined: what a willing buyer would pay a willing seller. The question here is whether the Canadians would willingly pay $1 trillion when they already have Alberta. FTM, do they even HAVE a trillon? Per Google, total government revenue last year was $323.4 billion, so it'd have to be a long-term mortgage :-) – jamesqf Feb 19 '19 at 19:25
  • @James, indeed, ability to pay its one thing, but negotiations don't start unless ability to pay is real in the first place. So if anyone is to hypothetically evaluate what Montana is worth, I hope it would be with the assumption that Canada can pay. – 2578 Feb 19 '19 at 19:29
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    @fredsbend The whole point of what jamesqf says is that both a willing buyer and a willing seller are necessary to assess trade value. There's even a special word, "priceless", that connotes a situation where no one would be willing to offer the value of an item to the seller. Priceless doesn't mean "infinite value", it means priceless: not able to be priced. The costs of anything like this have to do with who has the ability to make an offer and how much the seller is willing to sell for. – Bryan Krause Feb 19 '19 at 20:09
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    @Bryan To answer "what's it worth?" with "whatever someone will pay" is near tautology. It's a common refrain among MBAs, but what a party can afford to pay is secondary to tabulating a fair and objective price. The phrase is said to highlight the business principle of getting the highest price, whether fair or not, with the assumption there's an aggregate market in the first place. With only 200 sovereign nations, there's no market by any stretch of the word. That is to say, this is about politics, not economics or business. So, the assumption a party can actually pay is reasonable. – 2578 Feb 19 '19 at 21:22
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    Perhaps you should clarify if Montanans become Canadian upon the transfer or if it is to be depopulated before the transfer. – H2ONaCl Feb 20 '19 at 21:09
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In theory this would work much like any other land transaction. The two parties would carefully evaluate what they think the land is worth, taking into account things like natural resources. Based on their respective calculations, they would then negotiate.

But when it comes national territory, yes, that makes things different. I'm not sure there is actually any good historical analogy to draw from in imagining how such a transaction would work in the modern world.

I'm think of things like the Louisiana Purchase, where the USA paid France for most of what is the Continental US today as a simple transaction. France wanted money and the USA wanted the territory.

Not exactly. What the US effectively bought was the rights to tax and colonize. Neither party had much of a clue as to what they were buying/selling when it came to the value of the territory itself. The French had barely explored it and they still had to deal with the natives who claimed that land. Even the very concept of national territory was still emerging at that point in history.

The US didn't plan to buy all that territory, they basically just wanted New Orleans. The US delegates were surprised that the French suddenly offered the rest of their territory at an almost nominal price. But in retrospect that it makes sense that without New Orleans, the rest of the territory might have been more of a burden then anything.

Much the same was true of the Alaska Purchase. Russia wanted to continue in the fur trade, but they didn't want to bear the cost of military protection. By selling the US the right to colonize, they were hoping to keep the British off their back.

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    What was being bought & sold in these transactions was soverignity, not the actual property. That is, if Jean-Pierre ownd a house in New Orleans, he still owned it after the US bought Louisiana. – jamesqf Feb 20 '19 at 19:08
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    @jamesqf -- What you state is correct with regard to land ownership that had already been recognized by the French government. But title to the land that had not been allocated to French citizens was transferred to the United States. Except for portions that were "reserved" for Indians and governmental purposes, the United States proceeded to give or sell that land to its log-unjammers, railroads, universities, and citizens. – Jasper Feb 21 '19 at 4:21
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Montana has a GDP of $34 billion, as about 1/4 of GDP is collected as tax, Montana provides about $8.5 billion to the government.

Assuming you would want an investment to pay about 5% per year a corporate state might be willing to pay about 170 billion for the right to tax the people of Montana.

This is naturally a very simplistic model but it puts the ballpark figure for how much a region might be "worth". If a sale were desired then it would be a matter for negotiation and agreement.

But the USA and Canada are not corporate states. They are constitutional democracies and countries. Countries in the modern world don't do business like this. There is no constitutional method by which the USA could "sell" a state. It is pretty certain to be unconstitutional. So it couldn't happen.

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    Unfortunately that's not how the calculation is going at all. What you should be looking at is profits and their government is in a deficit which means it would be like a corporation losing money. Also no outlook on eventual profits either. This means the vast majority of value will be coming from assets, and I'm not sure how much assets the government holds. – Matthew Liu Feb 20 '19 at 15:26
  • This is naturally a very simplistic model. The reality is that the sale of a state is not constitutionally permitted. – James K Feb 20 '19 at 15:37
  • There is an assumption in your answer that Montana comes populated. If it is populated and the residents become Canadian then healthcare and pensions would be provided so your calculation is missing costs so it is far from producing the right value. If the asker did not intend that the residents of Montana be included in the transfer then this answer does not apply. – H2ONaCl Feb 20 '19 at 21:49
  • The calculation is not the answer. The answer is "This is unconstitutional" – James K Feb 20 '19 at 23:48
  • @JamesK 34th Amendment. – Keith McClary Feb 25 '19 at 17:08
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Other examples might help, especially if they are more recent than the Louisiana Purchase.

Wikipedia has a list of United States territorial acquisitions, which includes the following paid ones:

  1. Louisiana Purchase: "$15 million (equivalent to $251 million in present-day terms)."
  2. Mexican Cession: "$15 million (equivalent to $403 million in present-day terms) and agreed to pay claims made by American citizens against Mexico which amounted to more than $3 million (equivalent to $81 million today)."
  3. Gadsden Purchase: "$10 million (equivalent to $301 million in present-day terms)".
  4. Alaska: "$7.2 million (2 cents per acre) on March 30, 1867 (equivalent to $129 million in present-day terms)".
  5. Spanish colonies (Puerto Rico, Guam, Philippines): "$20 million, equivalent to $602 million in present-day terms".

The most expensive was the most recent. That included the Philippines, which are no longer considered US territory. That also ended the Spanish-American War, so the money may have been for more than just the transferred territory.

The Gadsden Purchase was one of the two smallest.

Three of the acquisitions were larger than Montana. The most expensive was less than a billion dollars even in modern terms. From a historical basis, none of them have a territorial value that is even a thousandth of a trillion.

Beyond all this, Montana seems not the best choice. Alaska is contiguous with Canada but not any other US states. But Montana and Alaska both voted for the less Canadian-like politician. Their populations would not fit Canada.

Some places that vote for Democrats, who are more like Canadian politicians, include

  1. Maine.
  2. New Hampshire.
  3. Vermont.
  4. Massachusetts.
  5. Rhode Island.
  6. Connecticut.

Some cities that are relatively close to the Canadian border (or to the New England border):

  1. New York City.
  2. Buffalo.
  3. Detroit.
  4. Seattle.

If we add New Jersey (connected to New York City), that would also allow

  1. Northern Delaware.
  2. Philadelphia.
  3. Baltimore.
  4. Washington, DC.

Puerto Rico could go with them as well.

That population is much more consistent with Canada in their political views. Such a swap would give them a government more in line with their views.

This would be less land than Montana, but more people and economic activity. Something like 35 million population. Perhaps $2.5 trillion GDP.

More importantly than a simple money transfer, presumably Canada would pick up the obligations. Such obligations would include a couple trillion in debt but also trillions more in Social Security and Medicare obligations.

But as already mentioned, this wouldn't really work as a sale. It would make more sense as an independence vote.

  • The inflation adjustments are too low. The payments referenced were convertible to gold and silver. – Jasper Feb 21 '19 at 4:24
  • But you still have the willing buyer/seller problem. I expect many Americans would pay the Canadians to take NYC and Detroit, and maybe other east coast cities, but would the Canadians want them? OTOH, if I had a spare $trillion, I'd buy Montana myself :-) – jamesqf Feb 24 '19 at 18:43
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Assuming that Montanans become Canadian citizens and that public property becomes Province of Montana crown assets, the valuation should be based on how much Montana would contribute in Canadian federal taxes (personal + corporate) and how much they would receive in pensions and services compared to residents of other provinces. This value could well be negative.

Montana is the forty-sixth richest state in the United States of America, with a per capita income of $17,151.

Canada per capita income ~US$44,310.

  • I think your reasoning it's fine, but you're not answering why it should be done this way. I think there's perhaps other things states would consider before making a land purchase. +1 though for keeping it simple and logical. – 2578 Feb 24 '19 at 18:25
  • @fredsbend Most people seem to assume that the Montanans would go along with the land. If you are asking for a valuation of just the real estate, it would be different. (Probably more, but that doesn't sound very nice to say.) – Keith McClary Feb 24 '19 at 18:53
  • That's an old income figure for Montana. – H2ONaCl Feb 26 '19 at 2:16

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