Phelps and Gorham Purchase
1788 land deal in what is now western New York state
The Phelps and Gorham Purchase was the 1788 sale by the state of Massachusetts of its preemptive right to a portion of a large tract of land in western New York State owned by the Seneca nation of the Haudenosaunee Confederacy to a syndicate of land developers led by Oliver Phelps and Nathaniel Gorham. The larger tract of land is generally known as the "Genesee tract" and roughly encompasses all that portion of New York State west of Seneca Lake, consisting of about 6,000,000 acres (24,000 km2).
According to the Treaty of Hartford (1786), it was agreed that the Genesee tract was owned by the Senecas, was a part of and under the jurisdiction of New York State, and that Massachusetts had the preemptive right to purchase the land from the Senecas. In other words, the Senecas could sell the land only to the owner of those preemptive rights (unless those rights were relinquished), and that those rights were owned by Massachusetts.
In 1788, Phelps and Gorham purchased these preemptive rights to the Genesee tract from Massachusetts for about $1,000,000 (£300,000), to be paid in three annual installments. Some sources refer to this purchase of preemptive rights as the "Phelps and Gorham purchase". On July 8, 1788, at the First Treaty of Buffalo Creek, Phelps and Gorham petitioned the Senecas to sell them the entire parcel, but the Senecas agreed to sell only the easternmost third of the tract, for $5000 and a perpetual annuity of $500 per year. This portion consisted of about 2,250,000 acres (9,100 km2) east of the Genesee River plus the 12 miles (19 km) by 24 miles (39 km) Mill Yard Tract along the river's northwestern bank.
Within a year, monetary values rose and, in combination with poor sales, the syndicate was unable to make the second of three payments for the land west of the Genesee River, forcing them to default on exercising the remainder of the purchase agreement. They were also forced to sell at a discount much of the land they had already bought title to but had not yet re-sold; it was purchased by Robert Morris of Philadelphia, financier, U.S. Founding Father, and U.S. Senator.
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